Developments in the Middle East continue to feature prominently across the energy sector and wider news coverage. While the situation is still evolving, initial governmental and Ofgem focus has been on reinforcing confidence in the UK security of supply, maintaining a close focus on affordability, and emphasising the responsibility of suppliers and other market participants to keep customer outcomes at the centre of decision-making; three themes that continue to shape the wider regulatory landscape.
In this update, our Regulation & Compliance team provide a summary of the key policy developments, consultations and industry programme activity currently underway.
British Industrial Competitiveness Scheme (BICS) – Government Response and Implementation Consultation
On 16 April, the Department for Business and Trade (DBT) published its response to the British Industrial Competitiveness Scheme (BICS) consultation, alongside a further consultation setting out how the scheme is expected to operate in practice.
The BICS scheme, which is expected to launch in April 2027, is intended to support manufacturing frontier industries within the Industrial Strategy’s growth sectors (the ‘IS-8’), by providing a % discount on the policy costs associated with the Renewables Obligation (RO), Feed-in Tariff (FiT) and Capacity Market (CM) schemes.
Based on current assumption the Department suggest over 10,000 businesses could be eligible for support, with discounts of up to 35 to £40/MWh.
To be eligible for BICS, a business must operate in an eligible sector, as defined by SIC codes, and manufacture at least one eligible product, as defined HS6 Code. The percentage exemption that they receive, either 50% or 100%, will depend on the proportion of electricity use at each site which relates to manufacturing of eligible products.
The DBT has published an updated list of eligible SIC and HS6 codes in the supporting Annex to the consultation response, with further plans to introduce an online eligibility checker to help businesses understand whether they are likely to qualify. The Department will also work on Guidance to accompany the final legislation, with details on how to deal with sites with shared meters (including those meters owned by third parties), how to calculate the pro-rating percentage and relevant evidence requirements.
Once granted, an exemption certificate is expected to remain valid for two years, supported by an annual declaration confirming that a business’s eligibility status has not changed. Electricity suppliers will be responsible for passing on any discounts to eligible businesses although the government acknowledge that electricity suppliers may pass through exemptions to businesses in different ways.
To support delivery ahead of the planned April 2027 implementation date, DBT has outlined an indicative timetable:
- October – November 2026: Businesses provide information to DBT to support eligibility identification
- October 2026 – January 2027: Eligibility assessments take place and certificates are issued by DBT and shared with suppliers directly and/or via customers
- April 2027: Suppliers apply exemptions for confirmed eligible businesses
Businesses that are not identified during the initial window are expected to be considered during later identification rounds. In practice, this means eligible businesses will need to engage with the identification window to ensure support can be applied from April 2027.
Smart Metering Policy Framework Post 2025 – Decision
On 10 March, DESNZ published its response to one of two smart metering consultations. While the Smart Metering Policy Framework Post 2025 had a heavy emphasis on the domestic market, some policy areas DESNZ decided on have a direct impact on non-domestic customers.
From 1 January 2027, non-domestic suppliers will be legally mandated to do the following:
- Take all reasonable steps to address non-operational SMETS meters within 90 working days.
- Take all reasonable steps to pre-emptively replace discontinued technologies prior to the specified dates
For domestic suppliers, the new roll-out approach introduces supplier-led deployment plans and annual milestones, supported by strengthened regulatory oversight from Ofgem.
While the Government has confirmed the overall direction of travel for the domestic rollout beyond 2025, further clarity is still expected on arrangements for the non-domestic rollout, with a decision anticipated in Spring 2026. We will continue to monitor related policy outputs and any resulting implementation requirements as they are published.
Electricity Bill Discount Scheme: Government Response
On 24 March, DESNZ published its response to the Electricity Bill Discount Scheme. The scheme will provide discounts of up to £250 a year for 10 years to households situated near new or significantly upgraded electricity network transmission infrastructure.
While only domestic customers will be eligible to receive the discounts, the Government confirmed that the scheme will be apportioned volumetrically across electricity suppliers, funded across electricity consumers more broadly, meaning the associated costs are expected to be recovered through electricity bills paid by both domestic and non-domestic customers.
Although the exact number of eligible households is yet to be confirmed, the impact assessment estimates that up to 166,000 households could qualify at the height of the scheme .The Government’s intention is to spread the costs of the scheme across the wider electricity consumer base, helping to minimise the impact on individual bills, adding around £0.14per MWh.
Energy Intensive Industries (EIIs) will be exempt from contributing towards the scheme. To support this exemption, electricity supply volumes associated with EIIs will be excluded from the calculation of suppliers’ contribution obligations, allowing suppliers to reflect the benefit of the exemption when serving eligible intensive users but placing more costs on an already squeezed middle.
DESNZ expects to begin laying the regulatory framework needed to implement the scheme in Summer 2026, with the aim of issuing the first payment to eligible households in early 2027.
Increasing Cyber Resilience in Downstream Energy – Consultation
On 27 March, DENSZ and Ofgem published a joint consultation seeking views on new approaches to cyber resilience regulation and how cyber resilience requirements apply across the downstream gas and electricity sector.
The consultation sets out two possible approaches:
- Reviewing NIS applicability and revising the scope of the NIS regulatory framework; reducing the current 250,000 customer threshold to ensure that all operators considered essential to the downstream sector are appropriately captured.
- Introducing baseline cyber resilience requirements for all Ofgem licensees; the consultation suggests using the Cyber Essentials certification scheme as a potential foundation for baseline compliance.
The consultation is open until 22 May 2026, after which DESNZ and Ofgem will review responses before setting out next steps.
Market-wide Half-Hourly Settlement (MHHS) Update
Elexon continues to report strong progress against programme timelines for the transition to new Half-Hourly Settlement arrangements. A new webpage has been published showing industry-level progress in migrating metering systems to the updated settlement framework.
The dashboard provides visibility of anonymised supplier performance, alongside the number of meter points and settlement volumes operating under both the new and legacy arrangements. Data is refreshed each working day following settlement runs, ensuring the position reflects the latest available progress across the market.
https://www.elexon.co.uk/bsc/data/half-hourly-settlement-data/
Springwatch
Not quite birds and blossoms, but plenty of movement across the regulatory landscape. Here’s what’s expected to emerge this spring.
- Gas Shipper Obligation / Hydrogen Levy – Further detail expected on how hydrogen-related cost recovery will apply through the Gas Shipper Obligation framework.
- Energy Consumer Outcomes Framework – Following its January 2026 Call for Input, Ofgem is expected to consult in Spring/Summer 2026 on potential changes to the regulatory framework based on a more outcomes-focused approach to the customer journey.
- Energy Ombudsman – Fairer, Faster Redress – Department for Energy Security and Net Zero expected to publish its decision following proposals to strengthen the powers and role of the Energy Ombudsman, shorten customer wait times, and support easier referral.
- Non-Domestic Smart Meter Rollout (Post-2025) – Further clarity expected following the January 2026 consultation closure. A decision will help confirm expectations around appropriate installation timelines, proportionate contract penalties and supplier reporting requirements
- Cost Allocation and Recovery Review – Ofgem confirmed it intends to further consult on policy options in Spring 2026, including potential approaches to how system costs are allocated across domestic and non-domestic consumers.
- Third-Party Intermediary (TPI) regulatory framework development – Ofgem continues to progress work toward a statutory framework for TPIs following earlier consultations, with a dedicated TPI team now in place and beginning to engage the market.
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