Electricity supplier obligations: Changes from 1 April 2023

Electricity supplier obligations: Changes on the horizon

Changes are being made to some electricity suppliers’ obligations under the Electricity Supplier Obligations (ESO) scheme to reflect changes in the electricity market and ensure that the ESO scheme remains effective in promoting energy efficiency and reducing carbon emissions in the UK.  The updates are made under the Electricity Supplier Obligations (Excluded Electricity) (Amendment) Regulations 2023 and amend the Electricity Supplier Obligations (Excluded Electricity) Regulations 2001 from 1 April 2023.

The ESO scheme is designed to encourage suppliers to promote energy efficiency and reduce carbon emissions, and to help the UK meet its environmental and energy targets. The amended regulations apply to licensed suppliers who supply electricity to customers in the UK and who have a total supply obligation of 3 gigawatt hours (GWh) or more per year. In addition to large energy companies, this includes independent suppliers and companies that supply electricity as part of a wider service offering.

The amended regulations update the definition of “excluded electricity” to include electricity generated by a renewable energy generator that is accredited under the Smart Export Guarantee (SEG) scheme. The SEG scheme was introduced in 2019 and provides payments to small-scale renewable energy generators for the surplus electricity they export to the grid.

The amended regulations also update the definition of “electricity supplier” to include licensees who are authorised to supply electricity under the SEG scheme. This means that SEG licensees will now be required to meet their obligations under the ESO scheme.

In addition, the amended regulations update the requirements for electricity suppliers to report on their compliance with the ESO scheme. Suppliers will be required to provide more detailed information on the electricity they supply and the measures they have taken to promote energy efficiency and reduce carbon emissions.

Electricity supplier obligations and Net Zero: How we can help

The focus on net zero and climate change presents risks for businesses operating in the energy sector and the wider economy. By preparing now and taking a long term perspective, businesses can position themselves for the challenges and opportunities of a sustainable future.

With specialist lawyers experienced in all aspects of the net zero agenda, Walker Morris’ dedicated Infrastructure & Energy team can help businesses to successfully navigate compliance with the changing framework for electricity supplier obligations, and with legal and commercial issues associated with sustainability more generally.

We can help in an advisory capacity, keeping you fully informed as to legal/regulatory requirements, and we can help with policy/procedure reviews, corporate reporting, contractual negotiations, and with drafting new contractual arrangements or variations as required.  Walker Morris can provide comprehensive, cross-disciplinary advice, whether in relation to strategic risk management or transactional assistance, as well as tailored staff training on any net zero-related area or issue.

Please contact Ben Sheppard for further information.