The Energy Bill Relief Scheme Regulations 2022

CHAPTER 1 Determination of prices

Supply price

9.—(1) In these Regulations “ supply price” in relation to a supply contract means—

(a) the price (before the application of a discount under the scheme) of energy supplied under that contract, so far as that price is to be paid in respect of the quantity of energy supplied in any period, or

(b) if the supply contract provides for different prices (in respect of energy supplied at different times of day or measured by different meters, or otherwise), the average of such prices—

(i) weighted by the quantities in the relevant period to which each such price applies, or

(ii) where applicable, and to the extent that determining the average under sub-paragraph (b)(i) is not practicable, weighted by the number of hours in the day for which each such price applies.

(2) The supply price does not include amounts in respect of—

(a) value added tax;

(b) climate change levy.

Reference wholesale price – fixed price and variable price contracts

10.—(1) The Secretary of State must establish and publish a methodology for determining reference wholesale prices applicable to fixed price contracts and variable price contracts, including a timetable for publishing those prices.

(2) The methodology may—

(a) make different provision in respect of fixed price contracts and variable price contracts;

(b) in relation to a fixed price contract, make reference to the price-fix date of that contract;

(c) provide, in relation to any category of supply contract, for a reference wholesale price to be determined for the whole of the scheme period or for different reference wholesale prices to be determined for different periods within the scheme period;

(d) refer to published quotations of wholesale prices for gas or electricity traded in the wholesale markets at different times and for delivery at different times;

(e) permit the Secretary of State to decide the times at which it is appropriate, for the proper operation of the scheme, that reference wholesale prices should be published.

(3) The methodology must not refer to—

(a) any particular details of a variable price contract;

(b) any particular details of a fixed price contract other than the price-fix date.

(4) Where the methodology provides, in relation to a category of supply contract, for different reference wholesale prices to be determined for different periods, the methodology must provide for how it is to be determined which of those reference wholesale prices applies to any particular supply contract in that category.

(5) The Secretary of State must determine and publish, in accordance with and at the times determined under the methodology, the reference wholesale prices for variable price contracts and fixed price contracts.

(6) The Secretary of State may amend the methodology by giving notice of the amendment.

(7) Where, in accordance with the methodology or any amendment of it, the Secretary of State revises any wholesale reference price which has already been determined in respect of variable price contracts—

(a) the Secretary of State must publish the date, which must not be earlier than the date on which such revised price was published, on which the revision takes effect (“effective date”);

(b) the revised wholesale reference price—

(i) applies in respect of variable price contracts entered into on or after the effective date;

(ii) where so determined by the Secretary of State, applies in respect of energy supplied on and after the effective date under variable price contracts entered into before that date.

Reference wholesale price – flexible price contracts

11.—(1) In relation to a flexible price contract the reference wholesale price for any period (“ P”) in which energy is supplied is the contracted wholesale price on a volume-weighted average basis for that period.

(2) The volume-weighted average contracted wholesale price for P is determined by reference to any of the following that apply under that contract—

(a) any elections (and the quantities, periods and prices subject to those elections) made by the customer to fix the contracted wholesale price;

(b) any cancellations by the customer of such an election;

(c) any amounts (so far as relating to wholesale prices) payable by or to the customer in respect of such elections or cancellations;

(d) any amounts payable by the customer in respect of quantities of energy in default of such elections;

(e) the quantities, periods and prices on the basis of which the contracted wholesale price was fixed under any other mechanism under the contract;

(f) other amounts referable to the wholesale cost of electricity in accordance with the principle in paragraph (3),

each so far as attributable to energy supplied under the contract in P.

(3) The principle is that amounts payable by the customer under the supply contract—

(a) should be included in the contracted wholesale price where such payment has the effect of passing through to the customer a cost or risk incurred by the supplier and related to the cost of wholesale energy;

(b) should not be included in the contracted wholesale price where such amount is payable to compensate or reward the supplier for bearing, and not passing through to the customer, such a cost or risk.

(4) A supplier must—

(a) establish a methodology setting out the basis on which it will determine the reference wholesale price under each flexible price contract, or each kind of flexible price contract, that it enters or has entered into;

(b) keep the methodology under review and update it if appropriate;

(c) maintain, in respect of each flexible price contract, the data necessary to make those determinations in accordance with the relevant methodology;

(d) apply the relevant methodology in making those determinations.