The Contracts for Difference (Electricity Supplier Obligations) (Amendment) Regulations 2026

Published: Tue 3rd Nov 26

Expanded the types of government funding used to reduce electricity supplier levies and removed the mandatory three-quarter repayment deadline for those funds.

These Regulations amend the 2014 framework for the Contracts for Difference (CFD) scheme to expand how government funding can be used to offset the levy charged to electricity suppliers.

They remove restrictive definitions that previously limited qualifying government funds to those provided under specific sections of the Energy Act 2013 and abolish the mandatory three-quarter repayment rule.

The instrument applies to the CFD counterparty and all licensed electricity suppliers in England, Wales, Scotland, and Northern Ireland, adjusting how quarterly contributions and interim levy rates are calculated based on the terms of provided government financial assistance.

Arguments For

The explanatory note states that the regulations broaden the circumstances in which government funds can be paid into the scheme to reduce the levy amount on electricity suppliers.
The document indicates that these changes allow for financial assistance to be provided under section 13 of the Energy Prices Act 2022.
The regulations remove the rigid requirement that government funds must be repaid exactly three quarters later, allowing repayments to instead be governed by the specific terms of the funding provision.

Arguments Against

Legal scholars might note that the regulations increase administrative discretion by replacing a fixed statutory repayment schedule with flexible terms set by the government.
Electricity suppliers may face less predictability in levy forecasting because the timing and amount of repayments now depend on varying funding terms rather than a fixed quarterly rule.
Affected parties might question the lack of a full impact assessment, although the government asserts that no significant impact on the private or public sector is foreseen.

Citation, commencement and extent

1.—(1) These Regulations may be cited as the Contracts for Difference (Electricity Supplier Obligations) (Amendment) Regulations 2026 and come into force on 24th November 2026.
(2) These Regulations extend to England and Wales, Scotland and Northern Ireland.

This section establishes the official title of the regulations and sets the date they become legally effective as 24 November 2026.

It confirms that the rules apply across all four nations of the United Kingdom.

Amendment of the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014

The Contracts for Difference (Electricity Supplier Obligations) Regulations 2014(2) are amended as follows.

This provision identifies the primary legislation being modified.

It serves as the legal link that incorporates the subsequent changes into the existing 2014 regulatory framework for electricity supplier obligations.

Amendment to regulation 2 (interpretation)

In regulation 2, in paragraph (1), in the definition of "SoS funds", omit "(under section 154(2) (b) of the Act)".

This amendment broadens the definition of 'SoS funds' (Secretary of State funds) by removing a specific statutory reference.

It allows any government funds provided to the scheme to be recognized, rather than only those provided under one specific power in the Energy Act 2013.

Amendment to regulation 5 (CFD quarterly contribution)

In regulation 5, for the definition of "SoS repayment" substitute— "SoS repayment is the total amount of SoS funds that the CFD counterparty was required to repay during that period;

This section changes how government fund repayments are calculated within the quarterly levy.

It removes the previous requirement for funds to be repaid exactly three quarters after receipt, meaning the 'SoS repayment' figure is now determined by the actual amount required to be paid back during a specific period.

Amendment to regulation 7 (estimated cost, income & electricity supply)

In regulation 7—
(a) in paragraph (1), for "any SoS repayment and the CFD counterparty's estimates of TGPR and NDSR" substitute "the CFD counterparty's estimates of any SoS repayment, TGPR and NDSR";
(b) in paragraph (2), before sub-paragraph (a) insert—
"(za) the terms on which any SoS funds have been or are expected to be provided to the CFD counterparty;".

These changes require the CFD counterparty to estimate potential government fund repayments when calculating the interim levy rate.

It also mandates that the counterparty must take into account the specific legal and financial terms under which the government provided the funds when making these calculations.

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