As the new year brings fresh priorities and our Regulations & Compliance team begins 2026 still deciding on their New Year’s resolutions, one thing is certain: an ever-growing body of energy policy is already in place for the year ahead.
In this update, we have brought together some of the key policy programmes from DESNZ and Ofgem, highlighting what businesses, brokers and customers may want to keep an eye on throughout 2026 and beyond, with a continued focus on affordability, flexibility and fair outcomes across the market.
Increased Network Cost Support for Energy Intensive Industries (EIIs)
Relief on electricity network charges for Energy Intensive Industries (EIIs) is set to increase by 30% under confirmed changes to the Network Charging Compensation (NCC) scheme.
The current scheme, which has been in operation since 2024, provides eligible EIIs with a 60% relief on electricity network charges, claimed back 12 months in arrears. This will increase to 90% for network charges incurred from April 2026 and will be claimed back by EIIs in 2027.
To finance this scheme, the EII Support Levy (ESL) rate will be increased for April 2027, a cost which is currently incorporated into the energy bills of all non-EII businesses. The government states that the net impact on non-EII consumer bills will be negligible as they ”will bear down on [other] costs across the energy system”, a somewhat vague statement echoed across several other recent departmental publications.
British Industrial Competitiveness Scheme (BICS)
In June 2025, the Department for Business & Trade (DBT) announced a separate bill support scheme, designed to support manufacturing frontier industries within the Industrial Strategy’s growth sectors (the ‘IS-8’).
Similar in intent to the existing levy exemption delivered through the British Industrial Supercharger (BIS), eligible businesses under this alternative scheme would be exempt from the costs of the Renewables Obligation (RO), Feed-in Tariffs (FiT) and the Capacity Market (CM), which would reduce their energy costs by £30-40/MWh according to Government calculations.
To be eligible for BICS support, a business will need to meet the following criteria:
- Operate in one of the manufacturing frontier industries within an IS-8 sector.
OR
- Operate in a manufacturing foundational industry that provides important inputs to the frontier industries.
AND
AND
- Meet the electricity intensity threshold.
The latest consultation asks stakeholders whether they agree with the proposal to use SIC and HS codes to determine eligibility in accordance with the above criteria, the preferred options for calculating energy intensity, and whether eligibility should extend to other industries. The consultation closes on the 19th of January, with the government likely to publish its final criteria by mid-April 2026.
The scheme itself is expected to be operational by April 2027, but this is subject to relevant legislation.
Bill Support for Regional Data Centres in ‘AI Growth Zones’.
In another policy paper published in November, the Department for Science, Innovation & Technology (DSIT) identified three regional in which large data centres could benefit from energy price discounts to alleviate constraint costs from April 2027.
While the precise approach for attributing these discounts will be determined following further consultation, development sites located in Scotland, Cumbria and North East Regions are currently poised to receive respective discounts of up to £34/MWh, £16/MWh and £14/MWh. DSIT believe that the design of the AI Growth Zone Electricity Price Support Scheme will not result in additional costs for other electricity billpayers.
The government hope that the interventions outlined in the paper will reduce the time to power up and save a 500 MW data centre up to £80 million annually in electricity bills.
Non-domestic smart meter rollout post-2025
With annually binding installation targets ending in 2025, the Department for Energy Security & Net Zero are consulting on a new approach to mandate the use of smart-contingent contracts across the non-domestic sector from the 1st January 2027.
Under the proposed policy, new fixed term non-domestic energy contracts signed on or after the relevant date would have to be smart contingent. This means that the consumer is required to have or agree to have a smart or advanced meter installed at each of its relevant premises under the terms of that contract.
As currently drafted, Designated Premises[1] would be considered relevant, but the consultation does entertain expanding this remit to cover all non-domestic premises, including larger I&C sites.
If implemented, this contractual requirement would be coupled with a new legally binding consumer protection code, housed within a schedule of the Retail Energy Code (REC).
This schedule, which has already been drafted by DESNZ as part of the initial consultation, sets out the universal expectations for timely appointment fulfilment and fair and proportionate contract enforcement for all suppliers, as well as setting out related communication and reporting requirements.
Smart Guaranteed Performance Standards (GSOP)
Whilst Smart Contingent Contracts are not proposed to be mandated until 2027, Ofgem have been consulting throughout the year on the 2026 introduction of new Guaranteed Standards of Performance (GSOPs) relating to Smart Meters. The hope is that this will address initial appointment delays and operational difficulties and ultimately improve consumer confidence.
Initial proposals, first published in March 2025, were mooted to apply to all designated premises. However, the most recent minded to position, published in August 2025, settled on a more reserved and proportionate scope, limiting the standards to Microbusiness customers with SMETS capabilities.
The new rules were originally proposed to come into force in January 2026, but have yet to be implemented. Once in effect, suppliers will be required to make a standard GSOP compensation payment of £40 where any of the following standards are not met:
- Offering a SMETs installation appointment within 6 weeks of a microbusiness expressing an interest.
- Preventing failed installations due to reasons within the suppliers control.
- Completing an initial investigation of reported SMETs meter issues within 5 working days of the microbusiness reporting an issues.
Suppliers have been granted an additional three months to implement the final standard.
- Identifying, investigating and resolving non-communicating smart meters within 90 days (with extended timelines for issues involving industry service providers such as the DCC).
Consumer Outcomes & Wider GSOP Review
Ofgem are currently seeking stakeholder views on a new set of Consumer Outcomes, which set clear expectations for customer experiences across both domestic and non-domestic markets.
To integrate the outcomes into the existing regulatory framework, Ofgem is considering several approaches, from incorporating into the overarching Standards of Conduct and/or streamlining existing licence conditions to a whole-scale replacement of existing prescriptive licence conditions.
The regulator emphasised that they would consider combining different approaches to “achieve the optimal solution”, which may also include new monitoring, reporting and reputational incentives.
The Call for input on Consumer Outcomes was published alongside a wider scale call for input on the future role, scope, design and operation of the Guaranteed Standards of Performance.
The review considers expanding the standards to cover different areas of the market and additional areas of the customer journey, which forms part of Ofgem’s effort to foster competition and ensure that minimum performance standards reduce poor service and provide prompt automatic compensation where failures do occur across both domestic and non-domestic markets.
Faster, Fairer Redress For Disputes with Energy Suppliers
On the 23rd of October 2025, DESNZ released a consultation exploring options to ensure consumers have faster access to fair redress when they have issues with their energy supplier.
The consultation examines several potential measures, including reducing the timeframe in which suppliers are allowed to investigate and resolve the complaints before escalation, mandating early signposting to dispute resolution and/or introducing automatic customer referral.
DESNZ is also proposing to give the Energy Ombudsman more authority via statute, giving the organisation the power to levy penalties against suppliers for late remedy implementation, and giving statutory right to its rulings.
For the avoidance of doubt, the consultation does not extend to complaints against heat networks or Third-Party Intermediaries (TPIs).
On the Radar
We are expecting Ofgem to continue engaging with the market in the first half of 2026 to better understand the current structure of the TPI market, and develop principles, rules and registration requirements, whilst the government looks to introduce the relevant primary legislation, which will grant Ofgem the necessary powers required to regulate TPIs.
Ofgem’s Final Determination for RIIO-3, a highly influential factor in setting demand Transmission Network Use of System (TNUoS) charges, signalled a smaller increase in costs for 2026 compared to the Draft Determinations. However, there remains significant uncertainty over the longer-term cost trajectory, as this will depend on future policy decisions and infrastructure upgrades delivered through the reopener mechanism.
On the 10th of December, Ofgem published initial feedback to their Cost Allocation Review Call for input, which asked for views on whether there are fairer and more efficient ways to allocate and recover energy system costs from consumers. Views differed among respondents on their preferred method for allocation and recovering costs, but several clear themes were identified. Ofgem stated that they intend to consult on policy options in Spring 2026.
The industry migration window for MHHS will continue throughout 2026, with us starting our own migration activities in July 2026. The complete MHHS timeline runs up until July 2027, by which time all suppliers should have transitioned MPANs to the new industry settlement arrangements served by the Data Integration Platform (DIP).
[1] Non-domestic premises at which a metering point falls within Profile class 1-4 or has an annual consumption of 732,000kWh or less.
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