homenews and insights policy and regulatory changes spring 2023

Policy and regulation changes in the energy industry: Spring 2023

SSE flame logo
By SSE Energy Solutions
28 April 2023

Meet our SSE Energy Solutions experts


After a positive response to our first two policy and regulation newsletters, we’ve continued to work closely with our regulatory, economics and government policy experts to bring you the latest energy news. You can read the full update here or read on for a summary of the main points.

Machinery of Government change

Prime Minister Rishi Sunak made several changes to government departments in early February, separating energy from business. The title of the new department – Energy Security and Net Zero (DESNZ) – indicates where the government’s priorities lie regarding energy policy.

As part of the new department’s drive to act on energy security and reduce carbon emissions, it launched a new energy-saving campaign for businesses at the start of April.

Energy Bills Discount Scheme

DESNZ is finalising a new support scheme for businesses which will replace the incumbent Energy Bill Relief Scheme (EBRS). The new Energy Bills Discount Scheme (EBDS), which includes an enhanced scheme of support for Energy and Trade Intensive Industries (ETII), will cover energy consumption from 1 April 2023 till 31 March 2024.

The support levels set by the government are significantly lower than those for the EBRS. As a result, it’s likely that many businesses that benefitted from this winter’s support will no longer have government discounts applied to their bills. You can find up-to-date information on our energy bill support page.

Alternative Fuel Payment

The Non-Domestic Alternative Fuel Payment (ND AFP) is a scheme which forms part of the government’s cost of living assistance package for non-domestic consumers over winter 2022 to 2023.

The £150 ND AFP will provide non-domestic properties using alternative fuels for heating with comparable support to the discount given to non-domestic customers benefitting from the Energy Bill Relief Scheme.

Exemption for Energy Intensive Industries from the indirect costs of the Renewables Obligation

Last summer, the Department of Business, Energy and Industrial Strategy (BEIS) raised the possibility of exempting businesses with an Energy Intensive Industries (EIIs) certificate from all costs associated with the Renewables Obligation (RO). However, BEIS decided that the current EII exemption, which is at 85% of RO costs, will not be increased further for the 2023-2024 obligation year.

BEIS said that its response to the wider consultation on increasing the level of exemption EIIs receive from the costs of funding renewable energy initiatives will be made available in due course. This response will come from the new department, DESNZ. We'll provide updates on this in our future newsletters and LinkedIn page.

Industry programmes continue at pace

Smart metering

From 1 October 2024, suppliers will be required to provide greater data-driven information to enable customers to gain insights into consumption over time and make informed choices about when/how much energy they use, using half-hourly consumption data as the basis.

DESNZ has recently published a consultation on setting targets and tolerance levels for Years 3 and 4 of the rollout framework (2024 and 2025). Since many suppliers fell short of Year 1 targets, further initiatives will be needed to maximise the rollout in the allocated timeframe, with suppliers and the government working together to achieve the best possible customer outcomes.

Half Hourly Settlement

The industry programme to deliver half-hourly settlements for electricity customers continues its re-planning exercise to determine the timeline for delivering the needed changes.

While we had previously expected that Ofgem would decide on the re-plan by the end of March 2023, this deadline has now been extended to facilitate an industry consultation on the proposed re-plan. It's expected that the outcomes of this consultation will be considered by Ofgem in early-May, with a decision expected by early-June 2023.

Non-domestic consumer harm

In January this year, Jonathan Brearley, CEO of Ofgem, issued a letter to the Chancellor of the Exchequer highlighting the steps Ofgem is taking following reports of non-domestic consumer harm. In addition to compliance reviews on existing supplier obligations, Ofgem confirmed it’s launching a review into the non-domestic market, including a Call for Input to gather information from stakeholders.

We want a fair and efficient market for all consumers and are engaging closely with Ofgem and look forward to engaging further with the Call for Input.

Changes to policy and regulatory costs

Balancing Services Use of System (BSUoS) charges

A regulatory change in BSUoS (Balancing Services Use of System) charges has caused the forecast price to increase significantly. We do everything we can to shelter our customers from non-commodity cost fluctuations, but given the extent of this increase, we need to increase the rate SSE Choice customers pay.

SSE Choice customers’ billed rate will increase by 0.925p/kWh from 1 April 2023 for the remainder of their contract. There will be no change to the standing charge they pay. All other terms and conditions remain unaffected. Any sites with a price transfer date of September 2021 onwards are excluded from this uplift. After this time, we built this increase into our pricing, which aligned with Ofgem’s intentions.

Transmission Network Use of System (TNUoS) charges

From 1 April 2023, suppliers will be passed an increased share of transmission costs, known as TNUoS charges. Specifically, the allocation of fixed transmission costs is changing for many customers, and these charges will differ based on the customer’s location and the band or profile class the customer’s supply point is allocated. Band or profile class is based on the size of the connection and annual demand. Any changes relating to these costs will be made to the customer’s standing charge.