Policy paper

Scheme design for bill discounts for new transmission network infrastructure – update

Published 27 July 2026

Applies to England, Scotland and Wales

Introduction

In March 2025 the government announced its intention to establish an electricity bill discount scheme, to provide households closest to new electricity transmission network infrastructure with a discount of up to £250 per year, for up to 10 years.

The Planning and Infrastructure Act 2025 provides powers to establish the bill discount scheme in secondary legislation (also referred to as ‘regulations’ in this document). The government plans to lay secondary legislation in Parliament later this year. Subject to Parliament’s approval, it is intended that discounts will start to be delivered to eligible households in the first half of 2027.

In August 2025, the government published a consultation to gather stakeholders’ feedback on the provisional design for the scheme. The government’s response was published in March 2026, this provided an overview of the responses received along with the key decisions taken forward by the government. Since then, we have continued to engage with stakeholders and finalising the policy design ahead of laying secondary legislation in Parliament later this year. Later in summer, we will publish a non-exhaustive list of infrastructure projects that are expected to be eligible to provide an early indication to households on whether they may be eligible for the scheme.

On 18 May 2026, we announced that Ofgem is taking on the role of scheme administrator.^{[footnote 1]} Ofgem plans to publish a consultation this summer to set out its proposed administrative approach to the bill discount scheme.

Building on the positions published in the government response, this paper provides detail on the following areas to enable Ofgem and other stakeholders to prepare to deliver the scheme:

• Process for identifying eligible infrastructure
• Process for mapping the eligibility zone
• Summary of Transmission Owner (TO) responsibilities in providing information
• Property eligibility
• Scheme administrator functions and reporting
• Pass through requirement
• Responsibilities for communicating with recipients
• Scheme compliance and enforcement
• Payment windows and frequency
• Reconciliation design, unredeemed vouchers and unused funds.

Summary of proposed scheme

The scheme will provide eligible households living within 500 metres of eligible new or significantly upgraded onshore transmission infrastructure with electricity bill discounts of up to £250 per year for up to 10 years. It will initially apply to qualifying assets/works developed by licenced Transmission Owners (TOs) which start construction on or after 10 March 2025 and before 1st January 2040.

Most households will receive the discount automatically from their electricity supplier via the ‘automatic scheme’, paid in two 6-monthly instalments of £125 each year. Suppliers will also be responsible for delivering scheme benefits to their eligible pre-payment meter customers. A minority of households eligible for the scheme will not have a standard domestic electricity supply contract so cannot benefit via this route. These households will be able to apply to the scheme (via the ‘opt-in scheme’) and would receive their scheme benefit via a bank transfer or cash vouchers worth equivalent to £250 each year.

The scheme will be established by secondary legislation that must be approved by Parliament. The details set out in this document are subject to completion of the secondary legislation and Parliament giving its approval to that secondary legislation.

Process for identifying eligible infrastructure

The government response sets out which types of infrastructure will be eligible for the bill discount scheme, which will be provided for in the Regulations.^{[footnote 2]} Later in summer, we plan to publish a non-exhaustive list of infrastructure projects that are expected to be eligible for the scheme, subject to the legislation coming into force, the eligibility zone being finalised, and main construction work commencing.

For the scheme administrator to accurately track eligible works, it will need detail on the pipeline of eligible projects.^{[footnote 3]} TOs will be responsible for identifying infrastructure that qualifies for the scheme within their upcoming works, in accordance with eligibility criteria set out by the government. TOs will need to provide the scheme administrator with complete, accurate and up to date information on eligible infrastructure and their respective commencement dates in a timely manner (see summary of TO responsibilities table below). Where works are discontinued, TOs must notify the scheme administrator as soon as possible and no later than 60 days after the date of discontinuation.

Process for mapping the eligibility zone

Determining the zone

The government response explains that households within 500m of eligible transmission network projects will be able to receive a discount on their electricity bill, or alternative form of ‘scheme benefit’.

The 500m radius is defined as the ‘eligibility zone’, which is measured from the limit of deviation^{[footnote 4]} or infrastructure boundary of the qualifying works. The infrastructure boundary can take a different meaning depending on whether the eligible infrastructure is linear or not:

• For non-linear infrastructure, such as substations and converter stations, the zone will be measured once construction has started as 500m from the external perimeter of the security fence surrounding the infrastructure.
• For linear infrastructure (for example an overhead line) this zone will be 500m from the edge of the infrastructure’s limit of deviation specified in the grant of planning permission.

Timestamping the zone

The government response confirms that the eligibility zone will be timestamped by the scheme administrator, using data that TOs will provide when main construction work starts on the eligible infrastructure.^{[footnote 5]} Any eligible property that exists within the eligibility zone at the time of timestamping will be in scope of the scheme. Properties built or assigned an MPAN after this point will not be in scope of the scheme.

The government response defined ‘main construction work’ as the point at which work has started on site for the full main works contract (that is when main works commence, as set out in the planning application, and all pre-commencement conditions have been completed).

This does not include any initial public access or scoping work (that is site preparation works that take place prior to work under the main construction contract, such as site clearance, archaeological investigations, temporary compounds, upgrading existing public roads, access roads, or using specialist equipment to access the construction site).

Although the government response mentioned that access roads would be in scope, Transmission Owners have since confirmed that work commencing under a full main works contract does not include construction of access roads, so these have been removed from the definition.

TO data sharing

For the scheme administrator to accurately timestamp and map each eligibility zone, the TO must provide the following data to the scheme administrator:

• Geospatial data identifying the limits of deviation (linear infrastructure) or external security fence perimeter (non-linear infrastructure) of the eligible infrastructure in the form and manner specified by the scheme administrator. This must be provided as soon as possible and no later than 60 days of the date of construction commencement.
• The anticipated construction commencement date as soon as possible and no later than 60 days of the achievement of planning permission. The TOs must then confirm the actual construction commencement date as soon as possible and no later than 60 days after the beginning of construction.

Where the construction commencement date for an eligible project is earlier than the date that the scheme Regulations comes into force, then TOs should provide this information to the scheme administrator, as soon as practicable and no later than 60 days of the Regulations coming into force.

Where construction of an eligible project is permanently discontinued prior to completion, the TO must notify the scheme administrator in writing of the date on which the works were discontinued as soon as possible and no later than 60 days after that date. 

TOs will be responsible for ensuring that the information provided is complete, accurate, and up to date, is provided within the timeline requested by the scheme administrator and does not include geospatial vector data for ineligible works beyond what was requested. If TOs become aware of any inaccuracies in the data they provide, this should be highlighted to the scheme administrator as soon as practicable, and the scheme administrator will remeasure the eligibility zone if deemed appropriate.

Project pipeline: In addition to detailed information regarding eligible infrastructure, the TOs must also inform the scheme administrator of upcoming projects that will be in scope. This is to allow the scheme administrator to plan appropriately for the scheme. TOs will need to routinely share pipeline data for projects commencing in the year ahead. They should share information on this as soon as practicable after the date in which the scheme’s Regulations come into force, and no later than 60 days after this. Subsequent notifications should follow within 6 months of the previous date that such information was provided. The scheme administrator will advise the TO on the timeline for future data sharing.

Properties excluded from the scheme as a result of timestamping

The government response set out that new builds would be excluded from the automatic scheme, as properties must have a domestic electricity supply point to which a domestic class MPAN was assigned before the construction commencement date.^{[footnote 6]} In addition:

• New builds are also excluded from the opt-in scheme. To be eligible, properties must have a UPRN assigned and be using the property for domestic purposes before the construction commencement date.
• If a residential property converts from a commercial to domestic meter after the construction date, the property may still be eligible for the scheme so long as it was being used as a residential property prior to construction commencement, but residents will need to opt-in.
• Property extensions and properties that have changed their use from commercial to residential after the start of construction will be excluded from the scheme.

Properties in multiple eligibility zones

Our consultation stated that subject to deliverability, households should only benefit from the scheme once, even if they fall within multiple project’s eligibility zones.^{[footnote 7]} We do not intend for households to receive a scheme benefit for two different projects at the same time. In such cases, the household would be eligible for the project with the earliest construction commencement date, and no others.

If a household is in the eligibility zone of two or more projects which share the same construction commencement date, then the household would only be eligible for the project which the scheme administrator received geospatial vector data for first.

However, if a household is within the eligibility zone for multiple projects, begins receiving discounts in relation to one infrastructure project and construction is then discontinued before it is completed, the household will be able to receive the remainder of its discounts for the 10-year eligibility period for the other project. Our intention is that households will be eligible to receive discounts for a project for the full 10 years once construction starts. However, we do not intend for a household to receive a benefit for one project for the full 10 years and then receive a discount for another project afterwards.

Summary of TO responsibilities to provide information on eligible works:

Information	Format	Timing
Pipeline of projects that will include infrastructure that will be in scope of the scheme. This pipeline will only need to cover projects for the year ahead.	In writing.	As soon as practicable after the date in which the scheme’s Regulations come into force, and no later than 60 days after this. For subsequent notifications, within 6 months of the previous date that such information is provided to the scheme administrator.
For each eligible project: commencement date of main construction.	In writing.	As soon as possible after an eligible project receives planning permission. TOs will need to confirm as soon as possible after main construction starts and no later than 60 days after that date. If this date is prior to when the scheme’s Regulations come into effect, within 60 days of them coming into effect.
Geospatial data of eligible infrastructure.	Linear works (e.g. overhead lines): with geospatial vector data in a shapefile format identifying the lateral limits of deviation of linear infrastructure specified in the grant of planning permission. Non-linear works: the external perimeter of the security fence enclosing the non-linear infrastructure.	As soon as possible after construction starts, and no later than 60 days following the construction commencement date. If this date is prior to when the scheme’s Regulations come into effect, within 60 days of them coming into effect.
Discontinued works.	In writing.	As soon as possible after the date that the work was discontinued, or within 60 days of this.
Other information deemed relevant to the scheme administrator for carrying out their functions.		Within timeframe specified in the notice supplied by the scheme administrator.

The scheme administrator will provide guidance on the technical specifications of which the above information needs to be provided.

The scheme administrator may also give notice to Secretary of State, TOs or electricity suppliers to require them to provide information within a specified timeline to enable the scheme administrator to exercise its role.

Property eligibility

Multiple occupancy buildings

The government response stated that multiple occupancy buildings on commercial meters will not be eligible for the scheme.^{[footnote 8]} To provide further clarity, we intend for the following types of multiple occupancy buildings to be excluded:

• Care Homes / Nursing Homes
• Purpose-Built Student Accommodation
• Properties for religious communities, except for housing co-operatives.

The reason for excluding the above multi occupancy buildings is due to complex delivery challenges. An extensive assessment of delivery options was carried out but the challenges that this and stakeholder feedback highlighted meant that in practice it will not be possible to deliver the payment to the eligible recipients living at these building types and to do so would incur significant costs that are disproportionate to the small share of a payment each resident would have received.

Vacant properties

The policy intent is that properties’ residents benefit from the scheme, and that vacant properties should be excluded. 

For the automatic scheme, vacant properties will be excluded by default if the electricity supply has been disconnected, as no electricity bill will be paid in this instance, therefore there is no automatic route for delivering bill discounts. However, if the electricity supply has not been disconnected, vacant properties will continue to receive bill discounts; at this stage it is too administratively complex to identify which of them are vacant and exclude them.

Vacant properties will not be eligible for the opt-in scheme. Residents will need to apply and provide evidence that they reside at the eligible property and its capability of being used as a permanent residence. If a vacant property becomes inhabited, eligibility will be reinstated.

Pass through requirement

Residents of eligible properties (‘end users’) should benefit from the scheme and are the intended eligible recipient, even when they are not the electricity bill payer. We are therefore introducing a legal pass-through requirement for situations where someone other than the billpayer is eligible for the scheme. However, it is important that this obligation is proportionate and deliverable. The pass-through requirement is only applicable for the automatic scheme. For the opt-in scheme, we expect end-users to opt in themselves.

We have divided scenarios into the following categories:

• Mandatory pass-through requirement
• Expected pass-through, not mandatory; and
• No pass-through.

Mandatory pass-through requirement

There will be a mandatory pass-through requirement where:

• A landlord, estate agent, management company or other intermediary pays the electricity bill on behalf of end-user;
• There is a formal tenancy or licence arrangement, or formal sub-contract, in place;
• The end-user(s) are consuming electricity supplied to a property that’s eligible for the scheme; and
• The end-user is occupying the property on the date the intermediary receives the scheme benefit.

For these situations, the intermediary will be required to take all reasonable steps to ensure that the benefit is passed through to end-users of the eligible property. Where there is a chain of intermediaries, each intermediary must pass the benefit on until it reaches the end-user.

In cases where there is more than one end-user entitled to the scheme benefit, intermediary will need to divide the scheme benefit amount equally between end-users. Joint tenants, licensees or tenants in common will be treated as a single end-user.

Expected pass-through, not mandatory

Intermediaries will not be obligated to pass through the benefit in the arrangements listed below. However, where possible we still expect scheme benefits to be shared equally between anyone living in eligible properties:

• The end-user occupies the qualifying premises under an oral or implied lease/sub-lease or licence/sub-licence.
• The end-user lives in the same property as the intermediary; e.g. they are a lodger, or they hold a sub-tenancy agreement but reside in the same household.
• Tenanted properties such as HMOs, where one tenant pays bills on behalf of other tenants.
• Informal agreements, such as family members paying bills on behalf of residents.

No pass-through

The pass-through requirement does not apply in any form where the property is being used for holiday or short-term accommodation where there is no formal lease or licence in place.

Complying with the mandatory pass-through requirement

The intermediary can discharge their pass-through requirement duty through either of the below two methods:

Method	Timing	Requirements
Bank transfer to end user’s (s) nominated bank account.	Within 30 days of the intermediary receiving the scheme benefit.	Bank transfer must include a payment reference to identify the payment as being made for the purpose of effecting the pass-through. Intermediary must keep a record of the payment for 10 years, beginning with the date the first benefit was received.
A reduction in the amount of service charge* that the intermediary demands from the end user(s).	As soon as practicable after the intermediary receives the scheme benefit.	Intermediary must provide the end user with a written statement including the amount the service charge has been reduced by, and the reason for it. Intermediary must keep a record of the reduction for 10 years beginning with the date the first benefit was received.

*A service charge is an amount the end user pays in addition to rent for the eligible property, which is used either directly or indirectly for services, repairs, maintenance, improvement, insurance or the intermediary’s cost of management.

Compliance process

The intermediary will need to have taken all reasonable steps to secure the scheme benefit which they are entitled to and to ensure the benefit is passed on to the resident. Where an intermediary fails to pass through the scheme benefit, the resident is entitled to recover the amount from them as a civil debt.

The scheme administrator will be able to investigate cases where it has reasonable grounds to suspect that the person who received the benefit has not passed on the benefit when they should have, failed to provide information to the scheme administrator when requested, or provided materially misleading information.

The scheme administrator may give notice to require someone who receives the benefit to provide information to enable them to determine whether the recipient is an intermediary, and/or whether an intermediary has discharged their legal duty to pass through or otherwise carry out its functions that will be attributed to it under the Regulations.

Scheme administrator functions and reporting to Secretary of State

The consultation response sets out anticipated functions for the scheme administrator. To expand on this, the scheme administrator will have the following duties:

• To prepare a map showing the eligibility zones of eligible infrastructure;
• To establish and maintain a database containing:
  • the UPRN of the properties associated with each MPAN;
  • the electricity supplier which supplies a standard domestic electricity supply to each MPAN;
  • the total value of automatic scheme benefits paid for each MPAN;
  • the eligibility period for the automatic scheme and the opt-in scheme in relation to each of the qualifying infrastructure projects;
  • the persons/households to whom opt-in scheme benefits were delivered;
  • the value and method of delivery of opt-in scheme benefits;
  • the information provided to the scheme administrator in applications to the opt in scheme or to review decisions;
  • communications sent to premises in connection to the automatic scheme or opt-in scheme;
  • any other information which the scheme administrator considers relevant for the purpose of monitoring or managing the automatic or opt-in schemes;
• To prepare and publish guidance in relation to its functions.

The scheme administrator may require suppliers and TOs to give them certain information to support their role in preparing the map, outlined in the section above.

Government plans to monitor the scheme’s operational rollout and evaluate its effect on community attitudes towards new transmission network infrastructure. To support this, the scheme administrator will provide government with regular reports relating to the cost of exercising its functions in relation to the scheme. These reports will include forecasts ahead of future financial years, cost incurred after the end of each financial year, and the relevant costs incurred from the start of the current financial year and before the end of the financial year. We also intend for the scheme administrator to provide any other information that Secretary of State may reasonably require in relation to exercising its functions above.

Compliance

The scheme administrator will have compliance and enforcement powers in relation to both the automatic and opt-in parts of the scheme.

Electricity suppliers: Ofgem will have the power to request information and conduct audits to ensure electricity suppliers and TOs are carrying out their scheme obligations. Where a party is found to be non-compliant, Ofgem may take compliance and enforcement action.

TOs: TOs will be required to share relevant data with the scheme administrator, and Ofgem will have the power to request that information. The specific details of how compliance and enforcement will be handled to ensure TOs meet their scheme obligations will be set out in due course.

Automatic and opt-in recipients: Where the scheme administrator has reasonable grounds to suspect the below, it will be able to investigate further:

• An intermediary has not discharged their legal duty to pass through the discount to end-users
• An applicant or recipient has failed to provide information to the scheme administrator or does not meet the eligibility criteria
• An applicant or recipient has provided materially misleading information to the scheme administrator.

Where additional time is required to investigate, the scheme administrator may suspend the delivery of scheme benefits - either directly for opt‑in recipients, or by directing electricity suppliers to suspend delivery for automatic recipients. In all cases, the scheme administrator must notify the recipient setting out the reason for the suspension, the date from which benefits will be withheld, and the next steps.

Where the scheme administrator determines that an automatic recipient has failed to discharge their duties under the pass‑through requirement, or that an opt‑in recipient no longer meets the eligibility criteria, or any recipient has failed to comply with an information request or has provided inaccurate or misleading information, it may either act directly or direct the electricity supplier to discontinue benefits. This may also include removing associated MPANs from current and future lists. If an intermediary is removed from the automatic scheme due to failure to pass-through the benefit, the end-user will have the opportunity to opt-in for future payments, but missed payments will not be backdated. In some cases, the scheme administrator or electricity supplier may seek to recover payments to which the recipient was not entitled to, or, in the case of intermediaries, amounts that should have been passed through to end users. However, recovery from intermediaries may be limited where the end‑user has already recovered those amounts directly.

If fraudulent activity is suspected in relation to any of the above or as the outcome of an investigation, the matter will be passed to the appropriate parties to investigate further and appropriate action taken.

Ofgem will set out the compliance approach in engagement with stakeholders in its administration consultation and guidance.

Right to review scheme administrator decisions

Opt-in applicants, scheme benefit recipients or intermediaries will be able to request a review of a decision made by the scheme administrator. This includes:

• A decision to reject an application;
• A decision to discontinue the delivery of scheme benefits to a recipient where the administrator believes they:
  • are no longer eligible;
  • do not qualify for the scheme;
  • provided materially misleading information; or
  • failed to provide requested information or documents evidencing how they met the eligibility criteria.
• A decision to suspend the delivery of scheme benefits to an intermediary on the grounds of non-compliance of the pass-through requirement.

Review requests must be submitted to the scheme administrator within 28 days of being informed of the relevant decision (that is within 28 days of being informed that an application to the opt-in scheme is unsuccessful). They must set out the grounds for the review request, provide supporting evidence, and be signed by/on behalf of the person who wishes to request the review.

The scheme administrator may request further information from the requestor to support their review. The requestor must provide such information where it is their possession.

The scheme administrator must make sure that the review is not carried out by a member of staff that was involved in the original decision that is subject to the review.

On review, the scheme administrator may revoke, vary, or confirm its original decision. Within 21 days the outcome decision, the scheme administrator must inform the review requestor and any other person who, in the scheme administrator’s opinion, is affected by the outcome.

The scheme administrator will set out the process for how review requests can be made.

Communications to recipients

The government response outlines roles and responsibilities for DESNZ, the scheme administrator, electricity suppliers, Transmission Owners, and other third parties that will be required to deliver the scheme. The below table sets out known responsibilities for providing communications at national, community, and household-level. Other responsibilities are still being finalised.

National

Automatic/opt-in	Responsible	Actions
Both	DESNZ	DESNZ will be responsible for national-scale communications which includes publishing scheme updates as the scheme progresses e.g. publishing a list of eligible projects which are provided by TOs.

 Community

Automatic/opt-in	Responsible	Actions
Both	Transmission Owners	Transmission Owners must engage with communities with an eligible project in their area on the community benefits package. This includes sharing scheme information on the bill discount scheme and community funds.

Household

Automatic/opt-in	Responsible	Actions
Automatic	Electricity suppliers	Suppliers must notify automatic households that they are eligible for the scheme and the method in which they will receive the scheme benefit. Suppliers must notify recipients of the date on which the property receives its final scheme benefit. Suppliers must include a notice on the recipient’s energy bill or statement after the delivery of a scheme benefit to inform the household that the scheme benefit has been delivered under the bill discount scheme.
Opt-in	Scheme administrator	The scheme administrator must notify applicants on the outcome of their application to the opt-in scheme. Where the application has been granted, the scheme administrator must notify the applicant on the method in which they will receive the scheme benefit. The scheme administrator must notify recipients on the date in which the property receives its final scheme benefit.

Payment windows and frequency

Payment timings and methods will differ depending on delivery route and electricity supply arrangements between the supplier and customer. The below table summarises positions across this topic, and more detail is provided below.

Household type	Scheme	Payment frequency	Payment window	Amount per payment / voucher
Eligible household on the automatic scheme, eligible smart pre-payment meter customers.	Automatic	Twice a year, aligned with payment windows.	Two payment windows each year, following each qualifying date.	£125 per payment, twice a year.
Eligible traditional pre-payment meter customer receiving vouchers.	Automatic	Typically twice a year, depending on supplier delivery approach and top-up limits; could be up to 4 times a year with smaller vouchers of £62.50 each.	Aligned with the two automatic scheme payment windows.	2 vouchers of £125 each per year, or 4 x £62.50 vouchers depending on account credit limits.
Eligible opt-in household receiving direct payment or cash voucher.	Opt-in	Once a year.	Rolling applications beginning on date of works commencing and ending 10 years after that date; applicants paid after successful application.	£250 payment or cash voucher.

Automatic scheme

The government response outlined that we intend for suppliers to deliver scheme benefits to recipients with ‘payment windows’ in the automatic scheme to provide flexibility for different payment billing types.^{[footnote 9]}We expect there to be two payment windows a year.

Before the start of each payment window, the scheme administrator will finalise the list of eligible MPANs and their associated supplier. We intend for this to be the qualifying date, whereby a household that lives in an eligible property on this date will receive a payment from their supplier during the subsequent payment window. We intend that the supplier a customer is with on the qualifying date is responsible for payment, even if the customer switches during the payment window.

In effect, eligible households on the automatic scheme should receive two payments of £125 a year, in alignment with the payment windows.

Electricity suppliers will have discretion to decide on the best route for delivering the scheme benefits to their eligible traditional pre-payment meter (PPM) customers. We expect for most cases the most appropriate route will be an energy voucher. For these instances, customers should expect to receive either (depending on the top-up limit):

• Two vouchers worth equivalent to £125 per year
• Four vouchers worth equivalent to £62.50 per year.

Vouchers that suppliers provide will need to be valid for at least 6 months before they expire from the date of issue. Suppliers will be able to determine how the delivery of vouchers is staggered.

Should an eligible household under the automatic scheme miss a payment due to an error on behalf of the supplier or scheme administrator, then this missed payment will be delivered as a backdated payment in the next window.

Opt-in scheme

As confirmed in the government response^{[footnote 10]} opt-in scheme benefits will be delivered by the scheme administrator either as a direct payment, or as a cash voucher. This will be a single £250 payment or cash voucher each year.

For opt-in households that are due to receive vouchers, the scheme administrator would deliver this scheme benefit as soon as reasonably practicable once it determines their application is successful. This would continue annually for 10 years, or until the scheme eligibility period expires (whichever is sooner).

Should the scheme administrator determine that there was a mistake in either determining the applicant’s eligibility, or the applicant was unable to apply for the scheme at an earlier date, then the scheme administrator would provide them with scheme benefits to which they have been entitled as soon as practicable.

 Reconciliation design, unredeemed vouchers and unused funds

The government response provides an overview of the reconciliation process that will be delivered to ‘balance the books’ between what a supplier should pay (based on their share of supply to the GB electricity market) versus what they actually pay (meaning discounts to customers and any allowable administration costs) towards the total cost of the scheme. The ‘total cost of the scheme’ includes discounts to automatic households, payments to opt-in households and suppliers’ and the scheme administrator’s allowable administration costs.^{[footnote 11]}

Reconciliation will take place every 6 months, following the closure of each payment window. There will therefore be two 6-month periods which each reconciliation will cover. Additionally, an initial reconciliation will take place after the Regulations for the scheme come into effect. This initial reconciliation and will be used to recover administrative costs incurred by the scheme administrator in the period between the Regulations coming into force and end of the 26/27 financial year, as well as costs to cover forecasted opt-in payments for the period between scheme launch and the first BAU reconciliation.

The scheme administrator will publish payment windows and a ‘reconciliation schedule’, which will include the following information for each financial year: 

• The start and end dates of the reconciliation periods in the financial year,
• The dates by which the scheme administrator will send invoices to electricity suppliers for payment (where suppliers’ contributions exceed their costs),
• The automatic scheme payment windows for the financial year,
• The deadlines for suppliers to submit information and evidence to the scheme administrator for the financial year,
• The deadlines by which payments must be made by electricity suppliers for the financial year, and
• The date on which the scheme administrator will make payments to electricity suppliers for the financial year.

The scheme administrator will have a bank account for it to make payments from and for electricity suppliers to pay into. This bank account will not accrue interest.

Suppliers’ administrative costs

Apart from the initial reconciliation period, suppliers will be allowed to claim a fixed amount per customer to cover certain administrative costs they incur in delivering the scheme. This is due to the obligations placed on suppliers in delivering the scheme, such as delivering payments to automatic scheme customers and vouchers to traditional pre-payment meter customers. We intend for suppliers to be able to claim one amount per automatic scheme customer and another, higher amount per traditional pre-payment meter customer due to the higher cost of delivering vouchers to those customers. The exact amounts will be determined by Secretary of State and will rise with inflation.

Scheme funding

The scheme is funded by an obligation placed on all licenced electricity suppliers. The amount each supplier should contribute to the scheme is based on their market share. In delivering the scheme, suppliers may incur certain costs, including delivering the discounts to their customers and some associated administrative costs.

If a supplier’s costs in a particular reconciliation period exceeds their calculated contribution in that period by an amount that is higher than the de minimis threshold, the scheme administrator will need to pay the supplier the excess by the specified date within the reconciliation schedule.

Where the supplier’s calculated contribution for a reconciliation period exceeds the supplier’s costs by an amount that is higher than the de minimis threshold, then the supplier will need to pay the scheme administrator the excess by the date stated in the reconciliation schedule for that period.

A de minimis threshold will be included to help reduce administrative burden associated with making payments for negligible amounts of money as part of scheme operation. The de minimis threshold will be set by the scheme administrator. Secretary of State will also set a maximum de minimis threshold that provides an upper limit to what the scheme administrator could set the de minimis threshold at.

Suppliers’ costs

The formula for the calculation of an electricity supplier’s costs (meaning what they actually pay in delivering the scheme) in each reconciliation period (apart from the initial reconciliation period) is:

where:

A is the total value of the automatic scheme benefits delivered by the electricity supplier during the relevant reconciliation period;  

B is the total amount recovered by the supplier in cases of recipient non-compliance in the reconciliation period;  

C is the number of customers which received an electricity supply via a traditional pre-payment meter during the relevant reconciliation period to which the electricity supplier delivered a scheme benefit during that period;  

D is the allowable administrative cost per traditional pre-payment meter (PPM) customer that a supplier can recover;

E is the number of customers which did not receive an electricity supply via a traditional pre-payment meter during the relevant reconciliation period to which the electricity supplier delivered a scheme benefit during that period;  

F is the allowable administrative cost per customer that is not a traditional PPM customer that a supplier can recover. 

Suppliers’ contribution

The formula for the calculation of an electricity supplier’s contribution (meaning what a supplier should pay towards the total cost of the scheme) in each reconciliation period is: 

where:

G is the total volume of electricity supplied by that electricity supplier in Great Britain during the relevant reconciliation period;  

H is the total volume of EII^{[footnote 12]}  excluded electricity supplied by that electricity supplier in Great Britain during the relevant reconciliation period;  

I is the total volume of electricity supplied by all electricity suppliers in Great Britain during the relevant reconciliation period;  

J is the total volume of EII excluded electricity supplied by all electricity suppliers in Great Britain during the relevant reconciliation period; 

K is the total cost of the scheme during the relevant reconciliation period, which is to be calculated using the formula below.  

Total cost of the scheme

In the initial reconciliation period, the formula for the calculation of the total cost of the scheme is:

where:

L is the total value of the opt-in scheme benefits estimated by the Scheme administrator to be delivered during the next reconciliation period;  

M is the estimate for costs for the upcoming financial year, in respect of the period between when Regulations come into force and on 31st March 2027.  

For the first reconciliation period of a calendar year (not including initial reconciliation period), the formula for the total cost of the scheme is:  

where:

N is the amount of supplier’s costs calculated using the above formula;  

L is the total value of the forecasted opt-in scheme benefits estimated by the scheme administrator to be delivered during the next reconciliation period;  

O is the total value of the opt-in scheme benefits delivered during the relevant reconciliation period;  

P is the total value of the opt-in scheme benefits which were previously estimated by the scheme administrator to be delivered during the relevant reconciliation period;  

Q is the total amount recovered from non-compliant recipients during the relevant reconciliation period;  

R is the scheme administrator’s estimated costs for the financial year which began in the relevant reconciliation period;  

S is the figure calculated for the scheme administrator’s relevant costs reasonably incurred in the financial year which ended in the relevant reconciliation period;  

T is the Scheme administrator’s previously estimated costs for the financial year which ended in the relevant reconciliation period;  

U is—  

• if the sum total of the outstanding amounts which defaulting electricity suppliers are liable to pay in respect of the previous reconciliation period does not exceed the mutualisation threshold, that total, or
• in all other cases, nil.

For all other reconciliations, the formula for the total cost of the scheme is the formula for the first reconciliation period as above, but read as if the values of R, S and T are zero.

Supplier failure

In the event of supplier failure, the Supplier of Last Resort (SoLR) mechanism would appoint a new supplier to take over the failed supplier’s customer base, including any associated bill discount scheme obligations. This will include any payments missed or partially made by the failed supplier, to ensure eligible customers continue to receive payments. Ofgem will reflect these transfers within future reconciliation calculations to ensure scheme obligations continue to be allocated appropriately.

The SoLR process is managed by Ofgem, whose authority to appoint a SoLR arises when it is entitled to revoke the supply licence of a failing supplier, typically due to insolvency.

Mutualisation

In situations where a supplier fails to pay their reconciliation amount (the ‘defaulting supplier’), mutualisation may be triggered, whereby non-defaulting obligated suppliers make up the shortfall based on their calculated contributions to the scheme.

Mutualisation is only triggered if the cumulative amount of missed reconciliation payments exceeds a mutualisation threshold. If this threshold is not reached, then any missing payments are accounted for in the reconciliation process. Secretary of State will set this mutualisation threshold.

Where the outstanding amount exceeds the mutualisation threshold in a reconciliation period, on the day after the later payment, then non-defaulting electricity suppliers will pay the scheme administrator the amount calculated in accordance with the formula below:  

where: 

R is the total volume of electricity supplied by the non-defaulting electricity supplier in Great Britain during the relevant reconciliation period;  

S is the total volume of EII excluded electricity supplied by the non-defaulting electricity supplier in Great Britain during the relevant reconciliation period; 

T is the total volume of electricity supplied by all non-defaulting electricity suppliers in Great Britain during the relevant reconciliation period;  

U is the total volume of EII excluded electricity by all non-defaulting suppliers in Great Britain during the relevant reconciliation period; V is the outstanding amount.  

The payment must be made by the date specified in the invoice sent by the scheme administrator to the electricity supplier in respect of the payment. This date cannot be shorter than 2 weeks from the date on which the invoice was sent.

The scheme administrator’s delivery costs

The scheme administrator must—  

• As soon as reasonably practicable after the date that the Regulations came into force, estimate the relevant costs to be reasonably incurred in the course of administering the scheme during the period beginning on that date and ending on 31st March 2027;
• Prior to the commencement of the first reconciliation period of each year, estimate the costs that the scheme administrator will incur in relation to administering the scheme in the financial year in which that first reconciliation period falls, and notify the Secretary of State of these costs, and;
• After the end of each financial year, calculate the relevant costs reasonably incurred in the financial year.

The scheme administrator should provide the Secretary of State with their forecasted costs at least 90 days before the scheme administrator takes payments in the first reconciliation period of the year. The Secretary of State must notify the scheme administrator no later than 30 days before this first reconciliation period whether they agree with the estimated costs. If Secretary of State disagrees with the estimate, DESNZ will need to consider its own estimate and provide this to the scheme administrator.

Provision of information by electricity suppliers

Electricity suppliers must provide the scheme administrator with the following information, no later than the date specified in the reconciliation schedule:

• The volume of electricity supplied to Great Britain during the reconciliation period,
• The volume of EII excluded electricity in Great Britain supplied during the reconciliation,
• The value of the automatic scheme benefits delivered by the electricity supplier during the reconciliation period, and
• Where automatic scheme benefits were delivered by voucher, the value of vouchers which—
  • were issued or redeemed during the reconciliation period, or
  • expired during the reconciliation period, and
• The number of households to which the electricity supplier delivered scheme benefits in the reconciliation period.

The information above must be accompanied by evidence that the supplier has delivered those scheme benefits and incurred those costs.  

Roles and responsibilities of the scheme administrator and Secretary of State for the reconciliation process

Scheme administrator	Secretary of State
Publish payment windows and a reconciliation schedule for each financial year.	Determine and publish the maximum de minimis threshold.
Determine the date on which each reconciliation period should start and end.	Determine and publish the mutualisation threshold.
Determine and publish the de minimis threshold, which must not exceed the maximum de minimis threshold.	Determine and publish the amount that suppliers can recover for their administrative costs per traditional pre-payment customer and all other customers.
Provide the Secretary of State with information which they may reasonably require to determine the maximum de minimis threshold and mutualisation threshold.
Send invoice for suppliers to pay into the reconciliation process, and provide date which suppliers must pay their invoice by.
Send electricity suppliers an invoice for the payment of the amount they are liable to pay for mutualisation and date which they must pay their invoice by.

Next steps

We plan to lay secondary legislation in parliament later this year and, subject to approval of the legislation by Parliament, we intend first payments of discounts to be delivered to households in the first half of 2027. Ofgem plan to publish a consultation on how they plan to administer the bill discount scheme this summer and we will continue to engage with stakeholders who are involved in the delivery of the scheme, as well as communicate any further updates.

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1. Bill discount scheme: administrator update - GOV.UK ↩

2. Scheme design for bill discounts for transmission network infrastructure: government response (accessible webpage) - GOV.UK, page 10. ↩

3. Scheme design for bill discounts for transmission network infrastructure: government response (accessible webpage) - GOV.UK, page 10. ↩

4. Limit of Deviation (LoD): A project’s LoD is confirmed when the route is consented and sets out a mapped geographical area where a project may be constructed. ↩

5. Scheme design for bill discounts for transmission network infrastructure: government response (accessible webpage) - GOV.UK, page 18 ↩

6. Scheme design for bill discounts for transmission network infrastructure: government response (accessible webpage) - GOV.UK, page 15 ↩

7. Scheme design for bill discounts for transmission network infrastructure: consultation document (accessible webpage) - GOV.UK, page 11 ↩

8. Scheme design for bill discounts for transmission network infrastructure: government response (accessible webpage) - GOV.UK, p 26 ↩

9. Scheme design for bill discounts for transmission network infrastructure: government response (accessible webpage) - GOV.UK, page 39 ↩

10. Scheme design for bill discounts for transmission network infrastructure: government response (accessible webpage) - GOV.UK, page 25 ↩

11. Scheme design for bill discounts for transmission network infrastructure: government response (accessible webpage) - GOV.UK, page 33 ↩

12. Energy Intensive Industries (EIIs) are those industries that hold a valid EII certificate issued by the Department of Business and Trade, and whom are recipients of the EII Exemption Scheme. Whereby, ‘EII certificate’ has the meaning given by regulation 8(1) of the Electricity Supplier Obligations (Amendment & Excluded Electricity) Regulations 2015. ↩