On Wednesday 21st September the government announced its Energy Bill Relief Scheme for non-domestic energy customers. It comes following the recent rollout of the £150billion energy support scheme, designed to help UK households combat the rise in energy costs from the 1st October. With businesses unable to benefit from the energy bill price cap, government intervention was crucial in order to protect businesses and jobs in the wake of spiralling energy costs.
In this article, we share the details of the Energy Bill Relief Scheme, which businesses are eligible and how much support you can expect. If you are a domestic energy customer we explain the help available in the following article, 'Energy Price Guarantee unit rates confirmed – what does this mean for you?'
What is the Energy Bill Relief Scheme?
The Energy Bill Relief Scheme is a government support package designed to help businesses, charities and public-sector organisations tackle rising energy costs. The support will discount wholesale gas and electricity prices for non-domestic customers from 1st October 2022 through to 31st March 2023. Support will initially run for 6 months, however, it will be reviewed after 3 months to assess the scheme's effectiveness and whether it needs extending to help the most vulnerable business customers. If you are eligible for support from the Energy Bill Relief Scheme you do not need to apply as it will automatically be applied to your energy bill.
How does the Energy Bill Relief Scheme work?
The Energy Bill Relief Scheme is for eligible businesses in England, Wales and Scotland and will apply to energy usage from 1st October 2022 until 31st March 2023. A similar scheme is expected to be rolled out for non-domestic energy customers in Northern Ireland in due course. The scheme will run for an initial 6-month period from 1st October 2022 until 31st March 2023 and non-domestic energy customers will not need to apply for the scheme as it will be applied to energy bills automatically.
Wholesale prices for gas and electricity in England, Wales and Scotland have been predicted to reach £180/MWh for gas and £600/MWh for electricity this winter and the Energy Bill Relief Scheme should ensure that wholesale prices for many businesses are fixed at around £75 per MWh for gas and £211 per MWh for electricity. The scheme is a little more complex than the energy price cap guarantee offered to households, however, as energy usage varies depending on the type of business you run, as well as the type of energy contract you are on. So, the exact rate your business pays for energy under the Energy Bill Relief Scheme is likely to vary from business to business.
The government will review the scheme in 3 months' time to decide on further support that may be required for the most vulnerable non-domestic customers from March 2023.
Who is eligible for the Energy Bill Relief Scheme?
Non-domestic customers are eligible for the Energy Bill Relief Scheme, so long as the price you are due to pay for your energy is above the government's wholesale supported price of £211/MWh (Megawatt per hour) of electricity and £75/MWh (Megawatt per hour) of gas. Any energy charges below this amount are not eligible for relief.
The Energy Bill Relief Scheme is for the following non-domestic energy customers:
- Voluntary sector organisations e.g charities
- Public sector organisations e.g hospitals, schools and care homes
Those listed above are eligible for the scheme if a new fixed-price energy contract was agreed upon or signed on or after 1st April 2022. Those businesses that are on a variable contract with their energy supplier are also eligible. In addition, non-domestic customers that are out of contract or on flexible purchase contracts are also eligible. Therefore, most businesses should be eligible for some form of help from the Energy Bill Relief Scheme but there may be some instances where exclusions apply or the discounts are reduced.
What discount will businesses see on energy bills?
The government has set a 'Supported Wholesale Price' which is a discount on business' energy usage per hour. The government's 'Supported Wholesale Price' is set to be £211/MWh for electricity and £75/MWh for gas but the exact support that a non-domestic customer will receive does depend on the type of contract that they are on. For example, eligible customers on a fixed contract will receive a discount which reflects the difference between the wholesale price agreed on the fixed-price contract and the government-supported price of £211/MWh for electricity and £75/MWh for gas.
Customers that are on a variable energy contract will receive a discount which is based on the government-supported wholesale price and the wholesale price in the variable contract. These businesses will only be able to receive a maximum discount which is set to be confirmed on 30th September but expected to be around £405/MWh for electricity and £115/MWh for gas. If you are a business that is on a variable contract, it may be worth considering switching to a fixed-rate contract, so that you know what you will be paying each month while still benefitting from the government relief.
The Gov.uk website provides detailed examples of how the scheme works and what impact it will have on certain businesses with schools and pubs receiving a discount equivalent to 40% in the example it shared. What your business actually pays and receives in support may vary from the examples shown.
How will my business receive the energy bill discount?
If you are eligible to receive the Energy Bill Relief Scheme this will be applied automatically to your energy bill. If you are currently out of contract you are advised to set up an energy contract and the relevant discount will be automatically applied.
Additional business support
In addition to the Energy Bill Discount Scheme announced by the government, the following help is available: