The Electricity Supplier Payments (Amendment) Regulations 2026 amend three existing regulations establishing levies on electricity suppliers that fund government energy schemes: the 'operational costs levy' for Contracts for Difference (CfD) and Nuclear Regulated Asset Base (RAB) schemes, and the 'settlement costs levy' under capacity market regulations.
These amendments specifically introduce new, varying rates for these levies, effective from April 1st, 2026, extending forward across several subsequent periods to ensure ongoing financial support for these crucial energy infrastructure projects.
Arguments For
Ensures the continued funding mechanism for essential electricity market schemes, specifically the Contracts for Difference (CfD) scheme and the Nuclear Regulated Asset Base (RAB) model, through updated levy rates.
Establishes predictable, multi-year levy rates for electricity suppliers, providing financial certainty for planning related to the financing of low-carbon energy projects.
Updates the settlement costs levy for electricity suppliers, reflecting current financial requirements under the relevant capacity mechanism regulations.
Arguments Against
Increases the financial obligations (levies) placed on electricity suppliers across several key energy financing mechanisms, potentially passing increased operational costs onto consumers.
The changes introduce new, higher levy rates starting April 1st, 2026, which may affect short-term market stability if not fully anticipated by supplier financial models.
While extending backward compatibility is limited, applying new settlement levy figures only from 2026 onwards might create administrative complexity when reconciling prior years' financial requirements.
2026 No. 359
ELECTRICITY
NUCLEAR ENERGY
The Electricity Supplier Payments (Amendment) Regulations 2026
----Made
25th March 2026
Coming into force in accordance with regulation 1(2)
This section identifies the statutory instrument as 2026 No. 359, confirms its subject matter relates to Electricity and Nuclear Energy, and states that it is formally titled 'The Electricity Supplier Payments (Amendment) Regulations 2026'.
The date of its making was March 25th, 2026, with the commencement date determined by the timeline set out in Regulation 1(2).
The Secretary of State makes these Regulations in exercise of the powers conferred by sections 6(1) and (6), 9(1) and (2), 27, 30, and 40(1) of the Energy Act 2013( a ); and sections 15(1) and (5) and 19(1) and (2) of the Nuclear Energy (Financing) Act 2022( b ).
The Secretary of State made these regulations using powers granted under specific sections of two Acts of Parliament: the Energy Act 2013 and the Nuclear Energy (Financing) Act 2022.
These legal powers authorize the government to regulate electricity payments and related financing mechanisms.
The Secretary of State has before making these Regulations-
- (a) consulted the persons listed in sections 24(1) and 40(2) of the Energy Act 2013 and section 25(1) of Nuclear Energy (Financing) Act 2022, and
- (b) had regard to the matters in section 5(2) of the Energy Act 2013.
Before creating these regulations, the Secretary of State performed mandatory pre-regulatory steps.
This involved consulting with specified relevant parties according to the lists in the Energy Act 2013 and the Nuclear Energy (Financing) Act 2022.
Additionally, the Secretary of State considered the specific guidance outlined in section 5(2) of the Energy Act 2013.
A draft of this instrument was laid before and approved by a resolution of each House of Parliament in accordance with sections 6(8) and 40(5) of the Energy Act 2013 and section 15(7) of the Nuclear Energy (Financing) Act 2022.
A draft version of this statutory instrument was presented to and formally approved by both the House of Commons and the House of Lords.
This parliamentary approval was conducted according to the necessary procedures established within the referenced sections of the Energy Act 2013 and the Nuclear Energy (Financing) Act 2022.
Citation, commencement and extent
- -(1) These Regulations may be cited as the Electricity Supplier Payments (Amendment) Regulations 2026.
(2) These Regulations come into force on the day after the day on which these Regulations are made, except for regulations 2 and 4 which come into force on 1st April 2026.
(3) These Regulations extend to England and Wales, Scotland and Northern Ireland, except for regulations 3 and 4 which extend to England and Wales and Scotland only.
Regulation 1 covers how the rules are officially named, when they start, and where they apply geographically.
They are cited as the Electricity Supplier Payments (Amendment) Regulations 2026.
Most provisions start the day after the regulations are made, but Regulations 2 and 4 have a delayed start on April 1st, 2026.
The regulations generally apply across the whole UK (England, Wales, Scotland, and Northern Ireland), but Regulations 3 and 4 apply only to England, Wales, and Scotland.
Amendment of the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014
- In regulation 23(7)(a) (operational costs levy rate) of the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014( c ), for paragraphs (i) to (iv), substitute-
( a ) 2013 c. 32. Section 6 was amended by section 18(2)(a) of the Energy Prices Act 2022 (c. 44).
( b ) 2022 c. 15.
( c ) S.I. 2014/2014; relevant amending instruments are S.I. 2018/449, 2021/235, 2022/401.
- '(i) £0.1089 per megawatt hour for any day during the operational cost period that begins on 1st April 2025;
- (ii) £0.1463 per megawatt hour for any day during the operational cost period that begins on 1st April 2026;
- (iii) £0.1714 per megawatt hour for any day during the operational cost period that begins on 1st April 2027;
- (iv) £0.1900 per megawatt hour for any day during the operational cost period that begins on 1st April 2028 or during any subsequent operational cost period; and'.
Regulation 2 updates the operational costs levy rate within the 2014 Contracts for Difference (CfD) Regulations.
It replaces the previous structure with new tiered rates per megawatt hour (MWh) applicable to electricity suppliers for funding the CfD scheme.
The rate is set at £0.1089/MWh for the period starting April 1, 2025; this increases to £0.1463/MWh from April 1, 2026; then to £0.1714/MWh from April 1, 2027; and finally to £0.1900/MWh from April 1, 2028, onwards.
Amendment of the Electricity Capacity (Supplier Payment etc.) Regulations 2014
- -(1) In regulation 9(2) (settlement costs levy) of the Electricity Capacity (Supplier Payment etc.) Regulations 2014( a ), for paragraphs (a) to (c), substitute-
- '(a) £9,112,000 where year Y is the relevant financial year commencing in 2026;
- (b) £10,346,000 where year Y is the relevant financial year commencing in 2027;
- (c) £11,474,000 where year Y is the relevant financial year commencing in 2028 or any subsequent financial year.'.
- (2) Paragraph (1) does not apply in respect of any financial year commencing before 2026.
(3) In paragraph (2) 'financial year' means a period of one year commencing with 1st April.
Regulation 3 amends the settlement costs levy imposed on suppliers under the Electricity Capacity Regulations.
It substitutes the total levy amount required for specific financial years (Year Y), starting April 2026.
The levy is set at £9,112,000 for the year starting in 2026, rising to £10,346,000 for the year starting in 2027, and reaching £11,474,000 for 2028 and all subsequent financial years.
This substitution only affects financial years that begin in 2026 or later, where a financial year is defined as the 12 months starting April 1st.
Amendment of the Nuclear Regulated Asset Base Model (Revenue Collection) Regulations 2023
- In regulation 23(7)(a) (operational costs levy rate) of the Nuclear Regulated Asset Base Model (Revenue Collection) Regulations 2023( b ), for paragraphs (i) to (iii), substitute-
- '(i) £0.0028 per megawatt hour for any day during the period that begins with 1st April 2025 and ends on 31st March 2026;
- (ii) £0.0063 per megawatt hour for any day during the period that begins with 1st April 2026 and ends on 31st March 2027;
- (iii) £0.0068 per megawatt hour for any day during the period that begins with 1st April 2027 and ends on 31st March 2028;
(iv) £0.0073 per megawatt hour for any day after 31st March 2028;'.
Regulation 4 modifies the operational costs levy rate in the 2023 Regulations concerning the Nuclear Regulated Asset Base (RAB) revenue collection.
It sets out specific MWh rates for electricity suppliers funding this new nuclear financing structure.
The rate is £0.0028/MWh for the period ending March 31, 2026.
It then increases to £0.0063/MWh for the year ending March 31, 2027, £0.0068/MWh for the year ending March 31, 2028, and settles at £0.0073/MWh thereafter.
25th March 2026
Michael Shanks Minister of State Department for Energy Security and Net Zero
This confirms the date of signing, March 25th, 2026, and identifies the responsible government official as Michael Shanks, Minister of State for the Department for Energy Security and Net Zero.
EXPLANATORY NOTE
(This note is not part of the Regulations)
These Regulations make amendments to the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014 (S.I. 2014/2014) (the 'ESO Regulations'); the Electricity Capacity (Supplier Payment etc.) Regulations 2014 (S.I. 2014/3354) (the 'Supplier Payment Regulations'); and the Nuclear Regulated Asset Base Model (Revenue Collection) Regulations 2023 (S.I. 2023/254) (the 'Revenue Collection Regulations').
Those Regulations each impose an obligation on electricity suppliers to pay an 'operational costs levy' (as per the ESO Regulations and Revenue Collection Regulations) and a 'settlement costs levy' (as per the Supplier Payment Regulations) in order to fund the operational costs of the respective schemes.
This instrument makes the following three changes. Firstly, regulation 2 amends the rate for the annual operational costs levy in the ESO Regulations from 1st April 2026, and for the next two operational cost periods and subsequent such periods. Secondly, regulation 3(1) provides an amended figure for the settlement costs levy in regulation 9(2) of the Supplier Payment Regulations from 1st April 2026, for the next two years and subsequent financial years. The revised figure does not apply in respect of any financial year before 2026. A financial year for this purpose means a period of one year commencing with 1st April. Thirdly, regulation 4 amends the rate for the annual operational costs levy in the Revenue Collection Regulations from 1st April 2026, and for the next two operational cost periods and subsequent such periods.
A full impact assessment has not been produced for this instrument as no, or no significant impact on the private, voluntary or public sectors is foreseen.
The Explanatory Note confirms that the Regulations amend three key sets of rules: the 'ESO Regulations' (CfD), the 'Supplier Payment Regulations' (Capacity), and the 'Revenue Collection Regulations' (Nuclear RAB).
These original regulations require electricity suppliers to pay levies—either for operational costs (CfD/RAB) or settlement costs—to finance their associated schemes.
This instrument implements three specific changes: revising the CfD operational costs levy (Reg 2) starting post-April 2026; adjusting the settlement costs levy figure for capacity payments (Reg 3) from April 2026 onwards; and setting new operational costs levy rates for the Nuclear RAB scheme (Reg 4) starting April 2026.
The government states that a full impact assessment was unnecessary because no significant impact on the private, voluntary, or public sectors is anticipated.
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