P442 – The Rule Change That Made Exempt Supply Work

What changed?

P442 Reporting chargeable volumes for exempt and licensed supply introduced the Exempt Supply Notification Agent (ESNA) role and formalised processes for splitting exempt and licensed volumes for Electricity Market Reform (EMR) levies.

Approved by Ofgem and implemented in February 2025, this change removes a major barrier for businesses seeking to use exemptions effectively.

Previously, exempt arrangements were hampered by unclear reporting and levy allocation. P442 fixes this by creating a transparent mechanism for exempt volumes to bypass Contracts for Difference (CfD) and Capacity Market (CM) charges.

Why it matters:

• Accurate reporting ensures levies apply only to licensed volumes, as intended under Energy Market Reform (EMR).
• This opens the door for smaller generators and corporate campuses to optimise energy strategies without regulatory risk.
  
  

Industry Examples:

• Manufacturing: Factories with solar or CHP can now confidently structure exempt arrangements, reducing operational costs.
• Public Sector: Councils running district heating schemes can avoid unnecessary levies, freeing up funds for community projects.
  
  

Transitional Note:

In late‑2025 P498 ensured continuity from interim processes while the market shifted to ESNAs.

If you had legacy arrangements, check how your data was handled. Read more at:

• https://www.ofgem.gov.uk/sites/default/files/2025-11/Ofgem-decision-to-approve-Balancing-and-Settlement-Code-BSC-modification-P498.pdf
• https://www.elexon.co.uk/bsc/mod-proposal/p498/ 

Action for Businesses:

Confirm your ESNA arrangements, review contract wording and ensure data flows align with P442 requirements. 

How our platform can support your business: 

With P442 now live, businesses need robust systems to manage ESNA processes and settlement data.

Our platform integrates seamlessly with ESNA workflows, offering secure data exchange, audit-ready reporting and customisable dashboards for exempt supply arrangements.

Whether you’re a public sector organisation running district energy schemes or a food & beverage manufacturer leveraging CHP, our platform ensures compliance while unlocking cost savings through accurate levy allocation.