The Warm Home Discount Regulations 2011

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations establish a scheme for reducing fuel poverty, to be known as the Warm Home Discount scheme (“the Scheme”). The Scheme is administered and enforced by the Office for Gas and Electricity Markets (“the Authority”).

The Scheme has effect until 31st March 2015, and places obligations on electricity suppliers who have 250,000 or more domestic customers, or who are part of a group of electricity or gas supply companies which together have 250,000 or more domestic customers (“compulsory scheme electricity suppliers”), to incur spending in each scheme year (as defined in regulation 2) on the provision of benefits to customers in or at risk of fuel poverty.

Part 3 requires compulsory scheme electricity suppliers, and other licensed electricity suppliers who opt in to this Part, to provide rebates of an amount increasing annually from £120 in 2011/12 to £140 in 2014/15, to customers specified by the Secretary of State (“core group customers”). A person who is so specified must appear to the Secretary of State to be a domestic customer of the electricity supplier required to provide the rebate, and to be, or to be the partner of, a person in receipt of state pension credit.

Part 4 requires compulsory scheme electricity suppliers to incur other spending (“non-core spending”) for the purpose of reducing fuel poverty. Chapter 1 makes general provision and Chapters 2, 3 and 4 provide for the three components of non-core spending: rebates to broader group customers, legacy spending and industry initiatives.

Regulation 13 provides for the Authority to calculate the amount of non-core spending which each electricity supplier is required to incur in a scheme year. Regulation 14 provides for adjustments to be made to a supplier’s obligation if it spent more or less than its obligation in the previous scheme year. Regulation 15 specifies maximum amounts of legacy spending or spending on industry initiatives which a supplier may count towards its obligation. Where an electricity supplier and a gas supplier are part of the same group of companies, regulation 16 allows legacy spending or spending on industry initiatives by the gas supplier to be counted towards the electricity supplier’s obligation.

Chapter 2 requires electricity suppliers to provide rebates, of the same amount as those provided to core group customers, to domestic customers meeting eligibility criteria determined by the supplier and approved by the Authority (“broader group customers”).

Chapter 3 allows a supplier which previously provided benefits to customers under a voluntary commitment (as defined in regulation 2) to count “legacy spending” towards its obligation. This consists of the amount of rebates (if not counted under other provisions of the scheme) and the value of discounted tariffs provided by the supplier to customers who meet criteria which it previously applied under its voluntary commitment. Regulations 23 and 24 and Schedule 3 provide for the valuation of discounted tariffs.

Chapter 4 allows a supplier to count towards its obligation spending on activities specified in Schedule 4 (“industry initiatives”). These include providing, or funding the provision by other persons of, certain types of non-financial benefits targeted at persons in fuel poverty or a fuel poverty risk group. They also include debt relief measures.

Part 5 contains supplementary provisions about the procedure for matters required to be approved by the Authority (regulation 28), determination by the Authority of amounts spent by suppliers (regulation 29), provision of information by suppliers to the Authority (regulation 30) and reviews of the Scheme (regulation 31).

A full impact assessment of the effect that this instrument will have on the costs of business and the voluntary sector is available from Fuel Poverty Team, Department of Energy & Climate Change, 3 Whitehall Place, London SW1A 2AW and is annexed to the Explanatory Memorandum which is available alongside the instrument on www.legislation.gov.uk.