Energy price cap: additional proposed changes to the Contracts for Difference cost allowance
- Publication type:
- Consultation
- Publication date:
- Closing date:
- 20 November 2026
- Status:
- Open
- Topic:
- Energy pricing rules,
- Electricity supply
- Subtopic:
- Energy price cap
Proposal to amend the Contracts for Difference (CfD) allowance to simplify the calculation and reflect an adjustment for the Business Industrial Competitiveness Scheme (BICS).
Consultation description
We are seeking views on making two technical changes to the CfD price cap allowance.
In our July 2026 CfD consultation, we asked stakeholders for views about simplifying the CfD price cap allowance. We suggested moving away from an annualised approach based on four quarters of forecast CfD payments, and instead basing the allowance on forecast payments for the upcoming quarter only. This consultation builds on that consultation.
We want to simplify the calculation of the CfD allowance, replacing the current annualised approach with a simplified approach that reflects only the upcoming quarter’s forecast CfD payments.
In response to the government’s BICS, we also want to incorporate new government funding into the CfD energy price cap allowance, to mitigate the impacts of BICS on domestic consumers.
If these changes are agreed, we aim to introduce the BICS adjustment in the April to June 2027 energy price cap period. We would aim to simplify the CfD allowance as soon as the necessary arrangements are in place.
Who should respond
We would like views from people who have an interest in how we set the additional wholesale allowances in the energy price cap. This includes:
- energy suppliers
- energy industry bodies
- consumer groups
- charities
How to respond
Submit your response by 20 November 2026 by emailing priceprotectionpolicy@ofgem.gov.uk.
Please note that the Excel (XLSX) document attached below is not fully accessible. If you require an alternative format, please contact priceprotectionpolicy@ofgem.gov.uk.