The Warm Home Discount (Reconciliation) Regulations 2011

PART 4 General

Interim and final reconciliation: payments

9.—(1) After the Operator carries out an interim reconciliation under Part 2 or a final reconciliation under Part 3, it must give notice—

(a) to each scheme electricity supplier which is liable to make or entitled to receive a payment, of—

(i) the amount of that payment (“the specified amount”); and

(ii) the supplier’s market share, as used in carrying out the reconciliation; and

(b) to each scheme electricity supplier which is liable to make a payment, of—

(i) the date by which the payment is to be made; or

(ii) if the supplier has authorised the Operator to debit money from its bank account, the date on which the payment is to be taken,

which (in either case) must be not less than 3 working days from the date on which the notice is given;

(c) to each scheme electricity supplier which is entitled to receive a payment, of the date on which the payment is to be made, which must be not more than 10 working days after the date specified under sub-paragraph (b) (or if, under sub-paragraph (b), different dates are specified to different scheme electricity suppliers, not more than 10 working days after the latest of those dates).

(2) A scheme electricity supplier which is given a notice that it is liable to make a payment must—

(a) pay the specified amount to the Operator by the date specified in the notice; or

(b) if the supplier has authorised the Operator to debit money from its bank account, ensure that there are sufficient funds in that account to enable payment to be taken on the date specified in the notice.

(3) The Operator must, subject to regulation 10(4), pay the specified amount to a scheme electricity supplier which is given a notice that it is entitled to receive a payment by the date specified in the notice.

Mutualisation

10.—(1) This regulation applies if one or more scheme electricity suppliers fail to make the whole or part of a reconciliation payment to the Operator by the date on which it is due.

(2) The Operator must—

(a) apportion the total of any unpaid amounts between all the scheme electricity suppliers other than the defaulting suppliers, in proportion to their market shares;

(b) give notice to each of those suppliers (a “mutualisation notice”) that it is liable to make a payment of the amount apportioned to it (a “mutualisation payment”), and specify in relation to that payment the matters referred to in regulation 9(1)(b).

(3) Regulation 9(2) applies in relation to a mutualisation notice.

(4) The Operator may defer the whole or part of any payments due to scheme electricity suppliers under these Regulations, up to an amount equal to the total of any unpaid amounts, until up to 10 working days after it has received—

(a) the unpaid amounts from the defaulting suppliers; or

(b) mutualisation payments from the other scheme electricity suppliers.

(5) If, after giving mutualisation notices to scheme electricity suppliers but before any of the suppliers have made a mutualisation payment, the Operator receives any unpaid amount from a defaulting supplier, the Operator must—

(a) cancel the mutualisation notice; and

(b) if any amounts still remain unpaid, issue a new mutualisation notice under paragraph (2) in relation to those amounts.

(6) If, after receiving mutualisation payments from scheme electricity suppliers, the Operator receives an unpaid amount from a defaulting supplier, the Operator must within 10 working days distribute the amount received from the defaulting supplier among the suppliers that have made mutualisation payments in proportion to their market shares.

(7) In this regulation—

“defaulting supplier” means a scheme electricity supplier which has failed to make the whole or part of a reconciliation payment to the Operator by the date on which it is due;

“unpaid amount” means an amount which a defaulting supplier has failed to pay by the date on which it is due.

Termination of supply licence

11.—(1) This regulation applies in relation to a scheme year if, between the date on which the Authority gives the Operator a notification under regulation 4(1) and the date on which the Authority gives the Operator a notification under regulation 7, the electricity supply licence of a scheme electricity supplier (E) is terminated.

(2) The Authority must as soon as practicable notify the Operator of the termination of E’s licence.

(3) E is not to be treated as a scheme electricity supplier for the purposes of any of the following events which takes place after the termination of its licence—

(a) an interim or final reconciliation;

(b) a mutualisation; or

(c) a distribution of interest under regulation 12(4) or 13.

(4) If, before the termination of E’s licence, it has been determined upon an interim reconciliation that E is entitled to receive or liable to pay an amount—

(a) to the extent that the amount is unpaid, E remains subject to that entitlement or liability notwithstanding the termination of its licence; and

(b) in relation to E, the determination upon the interim reconciliation is to be treated as final.

(5) Regulation (6) applies for the purposes of any event mentioned in paragraph (3) which takes places after the termination of E’s licence.

(6) The Operator must recalculate the market share of each remaining scheme electricity supplier in accordance with the formula—

where—

• M2 is the supplier’s recalculated market share;

• M1 is the supplier’s market share as notified to the Operator under regulation 4(1)(b);

• E1 is E’s market share as notified to the Operator under regulation 4(1)(b).

(7) If, before the termination of E’s licence, E received an interim reconciliation payment in relation to the scheme year (£P)—

(a) any amount that a supplier is entitled under regulation 8(2) to receive upon the final reconciliation is to be adjusted by subtracting M2% of £P; and

(b) any amount that a supplier is liable under regulation 8(3) to pay upon the final reconciliation is to be adjusted by adding M2% of £P.

(8) If, before the termination of E’s licence, E paid an interim reconciliation payment in the scheme year (£P)—

(a) any amount that a supplier is entitled under regulation 8(2) to receive upon the final reconciliation is to be adjusted by adding M2% of £P; and

(b) any amount that a supplier is liable under regulation 8(3) to pay upon the final reconciliation is to be adjusted by subtracting M2% of £P.

(9) For the purposes of this regulation an electricity supply licence is “terminated” if—

(a) it is revoked by the Authority in accordance with the terms of the licence;

(b) it is surrendered by the licensee; or

(c) it expires by effluxion of time.

Interest on late payments

12.—(1) A scheme electricity supplier which fails to make the whole or part of a payment under these Regulations by the date on which it is due must pay interest (“late payment interest”) calculated in accordance with paragraph (2) on the unpaid amount from the date on which the payment falls due to the date on which it is paid.

(2) Late payment interest is to be calculated at a rate of two percentage points above the Bank of England base rate.

(3) Any payment under these Regulations that is made by a scheme electricity supplier after the date on which it is due will be applied first to any late payment interest that is payable under paragraph (1).

(4) Where a scheme electricity supplier pays late payment interest to the Operator, the Operator must distribute the amount of the late payment interest among all other scheme electricity suppliers in proportion to their market shares.

Interest accrued by the Operator

13.—(1) The Operator must distribute to scheme electricity suppliers in proportion to their market shares the amount of any interest accrued by the Operator on payments made to it by scheme electricity suppliers under these Regulations.

(2) The Operator—

(a) must, if it has accrued any interest, make a distribution under paragraph (1) in each year from scheme year 2 onwards at the same time as it makes final reconciliation payments; and

(b) may make additional distributions at such times as it determines.

Appeals against errors in determinations

14.—(1) Subject to paragraphs (8) and (9), a scheme electricity supplier may appeal to the Secretary of State against a determination by the Operator—

(a) upon an interim reconciliation or a final reconciliation; or

(b) of the amounts of mutualisation payments which scheme electricity suppliers are liable to make,

on the ground that the Operator has made an error in its determination.

(2) An appeal must be made in writing within 10 working days after the scheme electricity supplier is notified of the determination.

(3) Before determining an appeal by a scheme electricity supplier, the Secretary of State must provide an opportunity to make representations to—

(a) each other scheme electricity supplier; and

(b) the Operator.

(4) On an appeal under paragraph (1) the Secretary of State may—

(a) dismiss the appeal; or

(b) allow the appeal and direct the Operator to make a fresh determination.

(5) If the Secretary of State directs the Operator to make a fresh determination, the Secretary of State may give instructions to the Operator in relation to the making of that determination, and the Operator must make the fresh determination in accordance with any such instructions.

(6) The Secretary of State must notify the decision upon an appeal to—

(a) every scheme electricity supplier; and

(b) the Operator.

(7) Paragraph (8) applies if—

(a) the Operator is a BSC Company; and

(b) the Balancing and Settlement Code provides for arrangements for the resolution of disputes about determinations by the Operator under these Regulations.

(8) The right of appeal under paragraph (1)—

(a) arises only after the dispute resolution arrangements under the Balancing and Settlement Code have been exhausted, and

(b) applies with the modification that references in paragraph (1) to the Operator are to be treated as including a reference to a person established or appointed under the Balancing and Settlement Code to resolve the dispute.

(9) The making of an appeal against a determination that a supplier is liable to make a payment does not suspend the supplier’s liability to make the payment.

(10) In this regulation—

“the Balancing and Settlement Code” means the code for governance of electricity balancing and settlement in Great Britain which is maintained in accordance with the conditions of licences granted under section 6(1) of the Electricity Act 1989(1); and

“BSC Company” has the same meaning as in the Balancing and Settlement Code.

Make-right amounts

15.—(1) This regulation applies if, in relation to the Operator’s determination on an interim or final reconciliation or a mutualisation—

(a) the Operator substitutes a different determination in accordance with a direction of the Secretary of State upon an appeal; or

(b) a person established or appointed to resolve disputes under arrangements mentioned in regulation 14(7) determines that an error has been made in the determination; or

(c) the Operator, on its own initiative, identifies that an error has been made in the determination.

(2) The Operator must calculate the amount (“the make-right amount”) that each scheme electricity supplier is liable to pay, or is entitled to receive (having regard to payments already made or received) to give effect to the substituted determination or to correct the error.

(3) The make-right amount is the sum of—

(a) the difference between the amount already paid or received by the scheme electricity supplier, and the amount which the supplier would have been liable to pay or entitled to receive if the error had not been made; and

(b) interest on that amount from the date of the payment or receipt, calculated at a rate of two percentage points above the Bank of England base rate.

(4) Regulation 9 applies in relation to payments under this regulation as it does in relation to payments upon an interim or final reconciliation.

Non-performance of obligations

16.—(1) If the Operator fails to carry out any obligation under these Regulations, any scheme electricity supplier affected by that failure may appeal to the Secretary of State.

(2) If the Secretary of State is satisfied that the Operator has failed to carry out an obligation under these Regulations, the Secretary of State must secure that the Operator carries out the obligation.

(3) For the purposes of this regulation, failing to carry out an obligation does not include making an error in a determination.

(1)

1989 c.29. Section 6 was substituted by section 30 of the Utilities Act 2000 (c.27) and subsection (1) of section 6 was amended by sections 136(1), 145(1) and (5) and 197(9) of, and Part 1 of Schedule 23 to, the Energy Act 2004 (c.20).