Energy UK response to DBT: feedback on Government response to BICS eligibility and approach & consultation on regulatory changes and scheme delivery

Executive Summary

Energy UK supports the Government’s ambition via the Department for Business and Trade (DBT) to secure economic growth, jobs and supply chain investment from the energy transition, and recognises the important role manufacturers will play. However, as outlined in our response to the first consultation, while we welcome efforts to address high electricity costs, we are concerned that the proposed British Industrial Competitiveness Scheme (BICS) lacks sufficient detail.[1] This risks undermining investor confidence and causing unintended impacts on other electricity consumers.

While we welcome BICS as a step toward addressing high electricity costs for manufacturers, we do not think the scheme is sufficiently ambitious to meet the scale of the challenge facing British businesses. As Energy UK and the CBI have highlighted, more comprehensive action is needed to deliver competitive energy costs and support industrial competitiveness.[2]

However, even putting the ambition issue to one side, there is a significant remaining challenge around the delivery of the scheme. The Government’s response to the eligibility and approach consultation clarified the policy’s scope and intent, but without a clear, workable delivery model. Despite Government statements, this scheme will increase costs for ineligible customers unless it is fully Exchequer-funded. There is considerable risk of supplier under recovery due to the continued uncertainty surrounding funding mechanisms. These issues can be mitigated by clearly defining eligibility and funding and providing the necessary scheme calculations to suppliers.

Government Response (to the eligibility & approach consultation)

The Government has taken some decisive policy steps beyond the first consultation, including an expansion of eligibility, the introduction of a lower electricity intensity threshold to support manufacturing frontier industries and the introduction of retrospective support funded by the Exchequer.

However, while Government continues to say it won’t fund the scheme through other consumers’ electricity bills, it is not clear how this will be achieved. Further, the Government has not yet provided a credible or workable delivery model.

Key elements of the scheme, including dual Standard Industrial Classification (SIC) and Harmonised System (HS) eligibility, Gross Value Added (GVA) intensity thresholds, and site-level proportional allocation of electricity use, rely on data that is not available within the energy supply chain. This creates a risk that operational complexity and financial exposure associated with eligibility and allocation will be borne by suppliers. This is the case even where they are not responsible for the design or administration of the tests.

In turn, these costs and risks are likely to be reflected in wider market pricing, with non-eligible customers, particularly small and medium-sized enterprises, most exposed. There is no certainty that the offsetting changes to pricing, combined with Exchequer funding will adequately compensate customers.

We suggest a central agency should do this work to ensure consistency and minimise duplication, while providing a more agile system than used for the British Industry Supercharger scheme. This agency would deliver a streamlined eligibility and data collection framework with clear roles, standardised data flows and faster decision-making – rather than relying on multiple bespoke arrangements. Such an approach would benefit Government by improving control over delivery, reducing implementation risk and ensuring a more consistent approach across suppliers and eligible sites.

Consultation on regulatory changes and scheme delivery

The Government proposes an eligibility-led delivery model in which DBT assesses businesses using industrial classification, GVA-based electricity-intensity testing, and related activity data, then notifies suppliers of the exemption outcome so they can apply it through billing and settlement systems.

As drafted, there are several risks associated with the model, including:

• Introducing pricing uncertainty that is passed through to customers
• Creating forecasting and settlement complexity
• Exposing suppliers to material open-ended financial risks, operational challenges and complex compliance issues

The core design issue is that much of the administrative complexity would sit at the supplier interface rather than being centralised. Without adjustment, there is a material risk that implementation costs and uncertainty could increase in the short term, potentially diluting the scheme’s intended benefit.

A clearer, more centralised approach to eligibility rules, funding and calculations would help reduce these risks and mitigate implementation uncertainty.

If you would like to discuss anything noted in this response in more detail, please contact me at candice.orr@energy-uk.org.uk.

[1] Energy UK (2026) Energy UK Response to British Industrial Competitiveness Scheme: consultation on scheme eligibility and approach

[2] Energy UK, CBI (2026) Cutting Business Energy Costs: The case for action