EBSS and EPG pass-through requirement comes into force in England, Wales and Scotland

The Energy Bills Support Scheme and Energy Price Guarantee Pass-through Requirement (England and Wales and Scotland) Regulations 2022 came into force on 1 November 2022¹. They were made under sections 19 and 26(2)(a) and (b) of the Energy Prices Act 2022, and are subject to approval by resolution of each House of Parliament within 28 days beginning with the day on which they were made, subject to extension for periods of dissolution, prorogation or adjournment of more than four days¹.

The Regulations apply to a "relevant intermediary", defined as a person to whom a scheme benefit has been provided in circumstances in which there is one or more end user other than the relevant intermediary, except where that person is an excluded person¹. An excluded person is defined as a person engaged in either or both of the provision of accommodation within the meaning of standard industrial classification divisions 55.1, 55.2, 55.3 (except persons providing mobile homes on protected sites as defined in the Mobile Homes Act 1983) and 55.9 (except persons providing student residences, school dormitories, workers hostels and rooming and boarding houses) and the provision of energy to such accommodation¹.

Under regulation 3, a relevant intermediary must ensure that as soon as reasonably practicable after a scheme benefit has been provided to it in respect of a period, it provides to each of its end users in respect of that period a just and reasonable pass-through amount¹. Where it does not pass through the whole of the scheme benefit, it is for the relevant intermediary to demonstrate to end users that the pass-through is just and reasonable, and it is entitled to take into account the extent to which its charges to end users reflect the increased cost of energy as a result of the energy crisis¹. A relevant intermediary must not retain more of the scheme benefit for itself than is proportionate to its own usage, and is not required to pass through amounts in excess of the scheme benefit provided to it, as adjusted to take account of its own end user usage where relevant¹. It is entitled to include energy used to provide common services to end users as part of its own usage to the extent that the cost of such energy is or will not be borne by its end users¹.

The Regulations set out how a pass-through may be effected, including application of a credit in the next invoice, statement of account or similar document, a payment in cash or by other means including bank transfer, tariff adjustment on tariff equipment, adjusting the amount taken by direct debit or standing order, or set off against an amount owed by the end user to the relevant intermediary¹. Notwithstanding any provision in the contract between the relevant intermediary and the end user at the time the scheme benefit was provided, the pass-through must be effected so that the pass-through amount is provided to the end user as soon as reasonably practicable¹. Where a contract expires or terminates, the relevant intermediary must effect a pass-through to reflect the end user's entitlement or remaining entitlement as soon as reasonably practicable following such expiry or termination¹.

Within 30 days beginning with the later of the day the Regulations came into force or the day the scheme benefit was provided, the relevant intermediary must notify end users of the amount of scheme benefit provided and whether it is an EBSS scheme benefit or an EPG scheme benefit¹. Where end users are not readily identifiable, the intermediary must notify them by notice on or near equipment in a place where it will be seen¹.

Where a period of six months has elapsed after the scheme benefit was provided and the pass-through has not been effected, an end user may recover the relevant pass-through amount from the relevant intermediary as a civil debt, and may claim interest at a rate of 2% per annum over the Bank of England base rate from the date 60 days after the scheme benefit was provided¹.

The Regulations were amended on 5 November 2022 by The Energy Bill Relief Scheme and Energy Price Guarantee Pass-through Requirement and Miscellaneous Amendments Regulations 2022 (S.I. 2022/1125), which omitted certain words in regulation 2 and substituted a word in regulation 2¹.

Why it matters for households

The Regulations affect households in England, Wales and Scotland that pay for their energy through an intermediary rather than directly to a domestic electricity or gas supplier. That includes tenants in buildings with a communal heating or hot water system, residents of serviced accommodation, and others where a landlord or operator receives the Energy Bills Support Scheme payment or the Energy Price Guarantee tariff reduction and then charges end users. From 1 November 2022, such intermediaries must pass on a just and reasonable amount, must not keep more than is proportionate to their own usage, and must tell end users the amount and which scheme it relates to within 30 days of the later of commencement or receipt¹. Where nothing is passed on within six months, the end user can recover the amount as a civil debt, with interest at 2% per annum over the Bank of England base rate from 60 days after the benefit was provided¹. The Regulations do not apply to excluded persons, including providers of mobile homes on protected sites and providers of student residences, school dormitories, workers hostels and rooming and boarding houses¹.

What happens next

The Regulations are subject to approval by resolution of each House of Parliament within 28 days beginning with the day on which they were made, subject to extension for periods of dissolution, prorogation or adjournment of more than four days¹. They were amended on 5 November 2022 by S.I. 2022/1125¹. No further steps are set out in the Regulations themselves.