Guidance on the pass-through requirements for energy price support provided to intermediaries
Updated 8 December 2022
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Overview
In response to the unprecedented rise in energy prices, the government has introduced energy price support to shield households and businesses from spiralling prices.
Without the launch of the schemes, businesses and consumers would have been left facing increasing cost of living pressures, with household energy bills estimated to increase to as high as £6,500 before the government stepped in. The Energy Price Guarantee (EPG) and Energy Bills Support Scheme (EBSS) will ensure that UK households will pay less on their energy bills this winter while businesses, charities and public sector organisations will be receiving equivalent levels of support this winter through the Energy Bill Relief Scheme (EBRS). The Alternative Fuel Payment (AFP) will help those households in Great Britain who use alternative fuels such as biomass or heating oil. All households in Northern Ireland will receive the Alternative Fuel Payment in recognition of the high prevalence of alternative fuel use.
There is separate guidance on the pass-through requirements for heat networks.
Pass-through Requirements on Intermediaries
In the Energy Prices Act 2022 (‘the Act’) Parliament approved the legislative footing to ensure that this support is provided to the people and businesses it is designed to help. The Act provides for regulations to be made requiring third-party intermediaries, such as landlords, to pass support through to end users, such as tenants. The government introduced regulations setting out the pass-through requirements for the Energy Bills Support Scheme, the Energy Price Guarantee, and the Energy Bill Relief Scheme in Great Britain on 1 November 2022. Regulations for pass-through requirements for the Energy Price Guarantee Northern Ireland and the Energy Bill Relief Scheme Northern Ireland came into force on 5 November 2022. Regulations for pass-through requirements for the Energy Bills Support Scheme and domestic Alternative Fuel Payment Northern Ireland came into force on 12 January 2023. Collectively these are referred to as ‘the pass-through regulations’ [footnote 1].
Any intermediary in England, Wales or Scotland that will be or has been provided support from EPG, EBSS, or EBRS, and in Northern Ireland that will be or has been provided support from the EPG NI, EBRS NI, or EBSS AFP NI, must ensure they are passing this support on, in a just and reasonable way, to end users. Application of pass-through requirements will also apply to support that has been provided to intermediaries in advance of the pass-through regulations coming into force (some intermediaries receiving support through EBRS may be exempt from this rule, where they have equipment which automatically charges tariffs as the energy is used, for example electric vehicle (EV) charging facilities).
GB Energy Bills Support Scheme (EBSS)
The Energy Bills Support Scheme provides a £400 non-repayable discount to eligible households to help with their energy bills over winter 2022 to 2023. This is to be paid in monthly instalments from October 2022 to March 2023.
Energy Price Guarantee (EPG)
The Energy Price Guarantee will ensure that UK households will pay less on their energy bills this winter. The EPG will reduce the cost of gas and electricity to all households with standard domestic supply contracts and will be deducted from bills automatically.
Energy Bills Support Scheme and domestic Alternative Fuel Payment Northern Ireland (EBSS AFP NI)
The Energy Bills Support Scheme and domestic Alternative Fuel Payment will together provide a £600 non-repayable payment to eligible households in Northern Ireland to help with their energy bills over winter 2022 to 2023. This will be paid from January 2023.
Energy Bill Relief Scheme (EBRS)
The Energy Bill Relief Scheme will enable the government to provide financial assistance on energy bills for all eligible non-domestic customers, including businesses, charities and public sector organisations. This applies to energy use from 1 October 2022 for an initial period of 6 months.
Heat Networks
Heat networks will benefit from the EBRS and will be required to pass through the benefits of the EBRS to their consumers. These requirements are covered in a separate set of regulations specific to heat networks. There is separate guidance for heat networks.
Who this applies to
Intermediaries
Relevant intermediaries are any individual or organisation that holds an electricity and/or gas contract and passes on the costs of the energy supplied under this contract to an end user of the energy supplied.
This would also cover intermediaries supplying a product (or service) where contractually a component of the price relates directly to the cost of electricity and/or gas.
This may include but is not limited to:
- landlords
- sublets
- student accommodation managers
- social housing providers
- local authorities (for council housing)
- site owners (for park homes)
- site managers
- marinas if using shore power (for boat homes)
- combined heat and power operators
- electric vehicle charging operators
- other residential building managers
It is possible for an intermediary to also be an end user. For example, a landlord who owns a block of flats and lives in one of them will be both an end user and an intermediary to the tenants of the other flats.
‘Relevant intermediary’ is defined in the pass-through regulations.
The legislation also sets out those persons excluded from this obligation. This exempts certain providers of accommodation based on standard industrial classification. The relevant pass-through regulations include the full list of exemptions.
Any person who falls under this definition must consider their obligations to pass through the benefit of the relevant schemes.
The intermediary should not pass-through support to excluded end users. For example, an end user located outside of the UK, such as those in the Republic of Ireland. If a scheme benefit has been provided to an intermediary in respect of energy supplied or made available to an excluded end user, the relevant intermediary must notify the person that provided the scheme benefit of this and such scheme benefit is not treated as having been provided to the relevant intermediary for the purposes of the pass-through regulations.
End users
An end user is the consumer of energy that is provided by an intermediary, this could include domestic or non-domestic consumers.
In the Act, section 19, an end user of an intermediary is a person:
- to whom energy is made available by the intermediary, where energy price support has been provided to the intermediary in respect of that energy
- to whom heating, cooling, hot water or electricity is made available by the intermediary using energy in respect of which energy price support has been provided to the intermediary
- who makes a qualifying payment [footnote 2] to the intermediary
For the purposes of the regulations an end user does not include a person to whom a relevant intermediary supplies or makes available energy at premises located outside the UK, such as end users in the Republic of Ireland.
Obligations on intermediaries
Passing on any benefit in a just and reasonable way
Intermediaries must pass on the discount irrespective of how the end user pays for their energy use. They can adjust the amount they pass on based on their charges to end users and must demonstrate to end users that this amount is just and reasonable.
Intermediaries can take into account the extent to which they have increased their charges to end users as a result of the energy crisis. For example, if the intermediary has shielded its end users from the impact of increased energy prices it may be just and reasonable for it to retain some or all of the scheme benefit.
If the intermediary charges an ‘all inclusive’ rent incorporating a fixed charge for energy use, the intermediary must pass the discount in a just and reasonable way.
The following must be considered when calculating how much benefit would be just and reasonable to pass through:
- if there is equipment (such as electric vehicle charge points) which automatically charges a tariff for usage, then the tariff must be amended to reflect the full scheme benefit
- if at the time the scheme benefit was provided to the intermediary, they were charging their end users based on usage or on the basis of some other division of the energy costs between its end users, then the intermediary must pass on the scheme benefit in the same proportions
- in all other cases where the above considerations do not apply, the intermediary must use the best available information to calculate the amount to pass through
Where a relevant intermediary uses energy to provide common services, they are entitled to include the costs of this within the calculation of what is just and reasonable to pass through to the extent that the cost of such energy is or will not be borne by the end user.
Intermediaries must also comply with the maximum resale price (MRP) [footnote 3]. MRP in Great Britain is set by Ofgem [footnote 4] and is the most anyone can charge for reselling gas or electricity which has already been bought from an authorised supplier. The MRP applies when a person buys energy from a licenced supplier and then sells that energy to a domestic consumer as an itemised element on the consumer’s bill (regardless of whether the licenced supply contract is domestic or non-domestic). The current maximum resale price is set at the same price as paid by the person reselling, including any discounts such as the EBSS, EPG or EBRS. Where there is no specified charge for gas or electricity or separate agreement for the resale of energy the MRP does not currently apply.
How the pass-through requirement is calculated
Below is a series of illustrative examples of how the pass-through requirements apply in hypothetical scenarios. This is not an exhaustive list, and each individual case should be considered in line with the pass-through Regulations.
Example 1: A full pass-through of the benefit of EBSS and EPG to an all-inclusive rental tenant including calculations
Scenario
A landlord rents out their accommodation to multiple tenants. The landlord charges a bundled per calendar month rate for tenants, including rent, energy bills, and other bills such as broadband. Tenants pay a flat rate on the energy costs per month, although this amount is not specifically itemised in their bill or rental contract.
The landlord is party to a standard domestic dual-fuel energy tariff, and they make monthly payments directly to a licenced energy supplier on behalf of tenants.
The landlord has increased their monthly charge to their tenants to fully reflect the rising energy costs they are paying as a result of the energy crisis.
Intermediary receives
On the energy bills they pay to the energy supplier, the landlord receives a discount on their payment to the value of:
- the monthly flat rate EBSS payment from government of £66/67, plus
- the EPG discount rate for gas and electricity multiplied by the amount of gas and electricity used by the property in that month
Illustrative application of ‘just and reasonable’ test
In this hypothetical scenario, providing the landlord does not also use any of the energy supplied, they should pass on the full value of the EBSS plus EPG benefit that has been provided each month to the tenants.
If tenants combine their payments, with one tenant paying on behalf of other tenants, then the landlords can pass the benefit to the paying tenant, and the paying tenant passing the benefit on to the other tenants. If the landlord has assumed when putting arrangements in place with its tenants an equal division of energy charges between the tenants, then each tenant must be provided a discount to the value of the full discount amount divided by the number of tenants.
If each tenant pays the landlord individually for the combined accommodation bill, and if the landlord has assumed when putting arrangements in place with its tenants an equal division of energy charges between the tenants, then the landlord must pass to each tenant the discount amount divided by the number of tenants.
Result
Each tenant receives the intended EBSS and EPG benefit for their monthly energy payments. The landlord makes no profit from the benefit they originally receive and incurs no extra energy costs as they have increased their charges.
Example 2: A partial pass-through of the benefit of EBRS to park home
Scenario
A park home resident buys their electricity from a site owner, who has a commercial electricity supply contract. The site owner only passes 50% of the full amount of its energy cost onto its park home residents The site owner has 5 residents on their site who all pay equal costs for the same amount of energy. In this scenario we are assuming no energy is being used for common parts.
Intermediary receives
The site owner receives a scheme benefit for the total cost of electricity it has purchased for its site (and multiple end users). The intermediary receives a £100 discount in November for its electricity bill from its electricity supplier.
Illustrative application of ‘just and reasonable’ test
It is just and reasonable for 50% of the benefit that has been provided to the intermediary to be passed on as they are only passing on 50% of their energy costs. The end users are also all on equal contracts.
Result
Each resident receives a portion of the benefit, as would be just and reasonable. Each resident will receive a £10 discount (50% of £100 divided between 5 residents) as soon as is reasonably practicable and in respect of their November electricity bill.
Example 3: No pass-through of the EBRS to business tenant
Scenario
A business tenant has a rental agreement with a landlord that is paid on a yearly basis and is inclusive of energy costs. The contract runs from 29 November 2021 to 28 November 2022. As the contract was entered into before the 1 December 2021 (when the forward wholesale energy prices were below the Government Supported Price), the business tenant’s yearly bill does not reflect the increased energy costs incurred by the landlord as a result of the energy crisis.
Intermediary receives
The landlord is entitled to an EBRS discount from its energy supplier for the months of October and November 2022, due to the increased cost of energy and the scheme coming into force.
Illustrative application of ‘just and reasonable’ test
The landlord has carried the burden of increased costs for this period, so is entitled to keep the discount it has been provided for October and November.
Result
The landlord keeps the discount it has been provided for October and November and does not pass this on. For December 2022 to December 2023, the rules concerning just and reasonable pass-through will apply again, dependent on how much of its energy cost the landlord passes on in the contract.
Example 4: Different amounts of pass-through of the EBRS to industrial customers
Scenario
An industrial gas company has both fixed and variable contracts with its customers for energy supply. The amount customers pay is linked to the energy cost of the industrial gas company. Some of these customers have fixed their energy cost in advance (fixed contracts). Others have not (variable contracts).
Intermediary receives
The intermediary will receive discounts for its customers based on the contract it has agreed with its end user. This means that they will receive a different EBRS discount for each customer.
Illustrative application of ‘just and reasonable’ test
In this hypothetical scenario it would be just and reasonable for different amounts to be passed on, in alignment with their contracts, as each customer is paying a different amount for its energy.
Result
The gas company will pass through a different amount to each end user depending on their particular circumstances and the amount of EBRS discount provided to the industrial gas company in respect of that end user and how much they are paying for energy.
Example 5: A full pass through of the benefit of EBSS and EPG to tenants in a Home of Multiple occupancy
Scenario
A landlord rents out their accommodation to multiple tenants. The accommodation has one domestic electricity meter point and the landlord charges each tenant a proportion of the energy use, this could be an equal split or based on usage.
Intermediary receives
On the energy bills they pay to the energy supplier, the landlord receives a discount on their payment to the value of:
- the monthly flat rate EBSS payment from government of £66/67, plus
- the EPG discount rate for gas and electricity multiplied by the amount of gas and electricity used by the property in that month
Illustrative application of ‘just and reasonable’ test
In this hypothetical scenario it would be just and reasonable for the landlord to pass on the full value of the EBSS plus EPG benefit that has been provided each month to the tenants using the same proportions used to split the overall bill.
If the landlord has assumed when putting arrangements in place with its tenants an equal division of energy charges between the tenants, then the landlord should pass to each tenant discount amount divided by the number of tenants.
Result
Each tenant receives the intended EBSS and EPG benefit for their monthly energy payments. The landlord makes no profit from the benefit they originally receive and incurs no extra energy costs as they have increased their charges.
Example 6: Charge Point Operators (CPOs)
The EBRS will be available to everyone on a non-domestic contract, including businesses and CPOs. As CPOs are an intermediary between energy suppliers and EV drivers, CPOs will have an obligation to pass on the benefits they receive to their end customers.
There will be no retrospective action required for CPOs. The obligation to pass on savings from the EBRS started with the scheme coming into force on 1 November 2022.
How and when the benefit must be passed through
The pass-through benefit must be passed on as soon as reasonably practicable. To the extent that scheme benefits have not been passed on when the underlying scheme ends, the expectation is that they will still be passed on in accordance with the pass-through requirements.
The pass-through benefit must be provided via the following methods, as set out in the pass-through regulations [footnote 1]:
- application of a credit in the next invoice, statement of account or similar document provided by the relevant intermediary to the end user
- a payment in cash or by any other means, including a bank transfer
- tariff adjustment on tariff equipment
- adjusting the amount of money taken pursuant to a direct debit or the amount of a standing order
- set off against an amount or part of an amount which was owed by the end user to the relevant intermediary at the time at which the scheme benefit was provided to the relevant intermediary
- or a combination of the methods set out above
Example 7: A full pass-through of EBSS AFP NI and EPG NI from a landlord to a rental tenant
Scenario
A landlord rents out their accommodation to a single tenant.
The landlord may charge a bundled per calendar month rate for the tenant, including rent, electricity bills, home heating oil bills, and other bills such as broadband. The tenant would pay a flat monthly rate for their energy costs, although this amount is not itemised in their bill or rental contract. Alternatively, the landlord may charge the tenant for these bills in an itemised way.
The landlord is party to a domestic electricity tariff, and they directly make payments to a licenced electricity supplier on behalf of their tenant. In addition, the landlord purchases home heating oil for the property from a supplier, as the home is not heated by gas and there is no relationship with a gas supplier.
The landlord has increased their monthly charge to their tenant to fully reflect the rising energy costs they are paying as a result of the energy crisis.
Intermediary receives
The landlord receives:
- £600 from the Energy Bills Support Scheme and Alternative Fuel Payment Northern Ireland (EBSS AFP NI); and
- The EPG NI discount for electricity multiplied by the amount of electricity used by that property in that month. The EPG NI discount value will be indicated on the bill for that month.
Illustrative application of ‘just and reasonable’ test
In this hypothetical scenario, providing the landlord does not use any of the electricity or home heating oil supplied, they should pass on the full value of the EBSS AFP NI benefit and EPG NI benefit (the full amount indicated on the bill) to the tenant.
Result
The tenant receives the intended EBSS AFP NI and EPG NI support. The landlord makes no profit from the support they have initially received and incurs no extra energy costs as they have increased their charges.
To share information with end users regarding the benefit
It is the responsibility of the intermediary to take reasonable steps to notify the end user in writing that they have been provided support and how much they are intending to pass on. This includes relevant intermediaries notifying end users if no benefit will be passed through. These reasonable steps could include a letter, email, or other type of message sent directly to the end user. A general notice on a website would not normally be sufficient unless that is the primary method that the intermediary and end user use to communicate.
This information must be shared within 30 days once the benefit is provided to the intermediary or within 30 days of the regulations coming into force for scheme benefits provided to relevant intermediaries before the Pass-through Regulations came into force. It must set out:
- how much benefit has been provided to the intermediary
- how much will be passed through to the end user
- if applicable, when and how this will be passed on
- if applicable, any steps the intermediary is taking to correct an error in previously passed-through scheme benefit
- how end users can appeal to the relevant intermediary
- that if end users do not receive the scheme benefit it is entitled to recover as a civil debt
If you have been provided financial support from the Energy Price Guarantee, Energy Bills Support Scheme, Alternative Fuel Payment Northern Ireland and/or the Energy Bills Relief Scheme, you must still notify your end users that you have received it. If you do not deem it appropriate to pass on some or all of the benefit, this notification must outline why this would be just and reasonable.
Reasonable steps to make contact can include but are not limited to:
- by letter
- by email
- by text or instant message
- in a newsletter, or
- message clearly posted on a physical notice board
Charge Point Operators (CPOs)
Under the regulations, CPOs will be required to inform end users that they have been provided the benefits of the EBRS scheme. They will also be required to set out the tariff adjustment they have made in order to pass the scheme benefit on to the end user. The contact details of the relevant intermediary, should the end user need further information about what they are entitled to, must also be provided. This information must be provided to the end user by notice, in a visible place on or near the equipment that is used to charge the tariff.
We have provided an example letter for intermediaries to send to end users. This template is to assist intermediaries in drafting their communications and is only illustrative. Intermediaries should refer to their obligations as set out in the Regulations.
What an end user can do if the pass-through requirements are not met
End users should not need to take action to receive this benefit as the obligation is on intermediaries to pass through the benefit and provide the information necessary to do so. If you do not believe this obligation has been met, you are advised to contact your intermediary to resolve this in the first instance. Within the regulations, there is also scope to pursue enforcement through civil proceedings.
Contact the intermediary
If you believe that you should have been provided a benefit, did not receive enough benefit, or reasonable steps weren’t taken to inform you of your eligibility to benefit, you are advised to raise this with the intermediary in the first instance. We have provided a template letter to assist end users in their communications with intermediaries. Template letters provided are only illustrative, and intermediaries should refer to their obligations as set out in the Regulations.
The intermediary is under an obligation to demonstrate that the pass-though is just and reasonable and therefore must provide justification for their calculation of the amount passed on.
If the 2 parties disagree over the payment amount, there are options available to resolve this, including enforcement of the payment, outlined below.
Enforcement
If an intermediary fails to appropriately pass on the payment or fails to provide necessary information to the end user, the end user may bring civil proceedings and may seek to recover sums due as a civil debt. There are no fines for intermediaries in such cases.
Should a court rule in the end user’s favour, they will be entitled to the payment, plus interest. Interest is set at 2% above the Bank of England’s base rate and will begin to accrue from 60 days after the intermediary first receives the relevant scheme benefit.
To find support on civil debt proceedings or further guidance visit: Make a court claim for money
Relevant legislation and other information
- Energy Prices Act 2020, section 19: Requirement to pass on energy price support to end users
- Energy Bill Relief Scheme Pass-through Requirement (England and Wales and Scotland) Regulations 2022
- Energy Bills Support Scheme and Energy Price Guarantee Pass-through Requirement (England and Wales and Scotland) Regulations 2022
- Energy Bills Support Scheme and Energy Price Guarantee Pass-through Requirement (Heat Suppliers) (Northern Ireland) Regulations 2022
- The Energy Bill Relief Scheme and Energy Price Guarantee Pass-through Requirement and Miscellaneous Amendments Regulations 2022
- The Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023
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Energy Bill Relief Scheme Pass-through Requirement Regulations (England and Wales and Scotland) (2022)
Energy Bills Support Scheme and Energy Price Guarantee Pass-through Requirement (England and Wales and Scotland) Regulations 2022
Energy Bills Support Scheme and Energy Price Guarantee Pass-through Requirement (Heat Suppliers) (Northern Ireland) Regulations 2022
Energy Bill Relief Scheme and Energy Price Guarantee Pass-through Requirement and Miscellaneous Amendments Regulations 2022
The Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023 ↩ ↩2 -
Qualifying Payment is defined in the Energy Prices Act 2022, section 19(5). ↩
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Ofgem: The resale of gas and electricity: guidance for resellers ↩
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Office of Gas and Electricity Markets, the energy regulator for Great Britain ↩