New transmission network Bill Discount Scheme to affect business power bills

What is it and why’s it needed?

The National Energy System Operator (NESO) indicates that delays to critical transmission network projects could lead to a four-fold increase in annual constraint costs. It quotes figures of around £1.7bn in 2024 to a peak of £8bn in 2030. Therefore, the Government says building transmission infrastructure as quickly as possible is essential to delivering a decarbonised power grid at least cost to the customer.

The Government has outlined a dual approach to supporting local communities. Firstly, it’s already implemented voluntary community funds, with initial funding to be allocated from April 2026 at the earliest. Licensed transmission owners (TOs) will play a role in delivering the scheme.

Secondly, the Government will legislate for electricity bill discounts of up to £250 a year for 10 years for households living within 500m of new or significantly upgraded electricity transmission network infrastructure. The enabling legislation – due later in 2026 - will set out the specific design of the scheme with suppliers being legally obliged to pass on the discounts to their eligible domestic customers.

When’s it coming into effect?

While the deployment of the scheme is dependent on the Government laying enabling (‘secondary’) legislation, its go live target is October 2026, with first payments to follow in early 2027.

What’s it expected to cost?

All electricity suppliers will be obliged to fund the bill discount scheme. Suppliers will recoup those costs by passing them onto their customers, both domestic and non-domestic, through a small increase to bills, although Government plans to exempt EIIs from contributing to the costs of the bill discount scheme. The Government is clear that delays to network infrastructure construction could increase consumer bills to a greater extent, due to network constraint costs.

Costs to non-domestic consumers are likely to be relatively small, according to the Government’s Impact Assessment (IA), with a peak cost equating to around 0.08% of the unit rate (roughly £0.14/MWh). Government expect this peak to come in 2028, with costs to slowly fall over the next decade. See the figure below for more detail.

Bill Discount Scheme, Annual policy cost as a proportion of the unit rate (central estimate)

Source: Department for Energy Security and Net Zero IA

There remains a lot of detail about the scheme still to be finalised, which won’t be known until the enabling legislation is drafted, for instance, how the scheme will be administered in practice and how the cost recovery mechanism will work. We’ll provide more information to our customers and partners as it arises.

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