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The new Energy Bill Relief Scheme will support businesses

Updated: May 2, 2023



UPDATE: 28/11/2022



On Monday 10th October, the government announced some key updates to its Energy Bill Relief Scheme.


  • Customers on existing fixed price contracts that were agreed on or after 1st December 2021 are now eligible for the scheme, provided the wholesale cost published by the government on the day the contract was agreed is more than the Government Supported Price. This has changed from the initial eligibility date of 1st April 2022.


  • The government has released a table of the discount available to all eligible customers from 1st December 2021 to 9th October 2022. This table will be updated weekly with the previous week’s figures included.


What is the scheme?


A new government scheme will see energy prices for non-domestic energy customers such as businesses, charities and public sector organisations cut – protecting them from rising energy costs.


Who does the scheme apply to?


Through a new government Energy Bill Relief Scheme, the government will provide a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals).

The scheme is intended to be of broad application. Still, there may be very limited exclusions, for example, businesses that use gas or electricity for the purpose of generating power they are selling back into the grid, such as power stations, pumped hydro or grid-level battery storage.


When does the scheme apply?


It will apply to fixed contracts agreed on or after 1st December 2021, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1st October 2022 to 31st March 2023, running for an initial 6-month period for all non-domestic energy users.


How is the discount calculated?


The level of price reduction for each business will vary depending on their contract type and

circumstances:


• Fixed price contracts:

Non-domestic customers on existing fixed-price contracts will be eligible for support as long as the contract was agreed on or after 1st December 2021. Provided that the wholesale element of the price the customer is paying is above the Government Supported Price, their per-unit energy costs will automatically be reduced by the relevant p/kWh for the duration of the Scheme. Customers entering new fixed price contracts after 1st October will receive support on the same basis.


• Default, deemed, or variable tariffs:

Those on default, deemed, or variable tariffs will receive a per-unit discount on energy costs, up to a maximum of the difference between the Supported Price and the average expected wholesale price over the period of the Scheme. The maximum discount, set on 30th September 2022, is £345/MWh for electricity and £91/MWh for gas.


• Flexible purchasing contracts

Some large non-domestic energy users buy energy using flexible contracts, which enable them to decide when to hedge for portions of their demand throughout the contract term. If you’re on a flexible purchase contract, your price reduction will depend on the difference between your monthly weighted average baseload price (determined by your individual hedging approach) and the government-supported price. In this case, the maximum support available per unit of energy will also be limited by the maximum discount.


How will the discount appear on the bill?


All discounts will be applied to the customer’s bill by the supplier in a p/kwh reduction. The savings will first be seen in October bills, typically received in November


Example of how the discounts will appear have been provided by EDF. Different suppliers may how their discounts slightly differently but the below example shows the Maximum Discount applied for someone Out of Contract or on Deemed.




What do I need to do to obtain the discount?


As with the Energy Price Guarantee for households, customers do not need to take action or apply to the scheme to access the support. Support (in the form of a p/kWh discount) will automatically be applied to bills.


Will I see the discount applied already to the pricing I receive from suppliers for forward contracts?


Suppliers will issue quotations based on the wholesale market for that day which will not take into consideration the government discount.


Should I engage in a fixed contract or stay on out-of-contract rates?


Non-domestic customers on default or variable tariffs will pay reduced bills, but these will still change over time and may still be subject to price increases. This is why the government is working with suppliers to ensure all their customers in England, Scotland and Wales are allowed to switch to a fixed contract/tariff for the duration of the scheme if they wish, underpinned by the government’s Energy Bill Relief Scheme support.


How will I know what discount I will receive when signing a contract?


Unfortunately, the government discount will not be visible to the customer when signing a new contract. The government has released daily discount rates from 1st December 2021. through to 9th October 2022. This table will be updated weekly, reflecting the previous week’s discounts.


The EBRS discount table is now available to download:

energy-bill-relief-scheme-discounts-fixed-variable (1)
.xlsx
Download XLSX • 34KB

We now have a Energy Bill Relief Scheme calculator to help work out what your bills will be including your discount. This may help you budget what to expect in the coming months


 

0151 459 3388


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