Price Cap - Update on the Green Gas Levy and default tariff cap
Correspondence and other
Publication date
Industry sector
Supply and Retail Market
In Autumn 2021, The Department for Business, Energy, and Industrial Strategy (BEIS) intends to launch the Green Gas Support Scheme which will support the deployment of new biomethane production plants to inject into the gas grid, contributing to the decarbonisation of our energy system. The Green Gas Support Scheme will be funded by the Green Gas Levy, which will place an obligation on licensed gas suppliers.
We are aware that the first collection of levy payments by suppliers is expected in Q1 of Financial Year 2022/23, and that this initial payment will cover the levy period when the default tariff cap (‘cap’) period 7 (October 2021 to March 2022) is in effect.
We are required to make a decision on cap period 7 by 6 August 2021, which will be ahead of the official launch of the scheme and the planned announcement of the initial levy rate. This means that we will not have certainty on the new scheme to enable us to decide whether we should amend the cap methodology to account for it, and, if so, how to appropriately amend the cap methodology to account for those costs by our August decision date.
We intend to review whether it would be appropriate to include an allowance for the Green Gas Levy in the cap and engage with stakeholders on this. If we decide to introduce an allowance, we will consider whether and how to reflect cap period 7 costs as part of that methodology.
In the meantime, if you have any further considerations that you would like to share with us, please email us at retailpriceregulation@ofgem.gov.uk