Energy Bill Relief Scheme explained
Tools & Resources
Key learnings
- The Energy Bill Relief Scheme is designed to cap the energy rates paid by businesses for six months.
One of the most pressing issues facing businesses is how they are going to pay their energy bills at a time when gas and electricity prices are rising fast. In this article, we explain what businesses need to know about the Energy Bill Relief Scheme.
The government recently launched the Energy Price Guarantee to help households by capping bills at £2,500 based on average usage.
This does not mean that all households will pay a maximum of £2,500, but rather that the unit rate and standing charges are capped.
The Energy Price Guarantee will be in place for two years starting on 1 October 2022 and caps prices at:
- Unit rate: 34.0p/kWh for electricity and 10.3p/kWh for gas
- Standing charge: 46p per day for electricity and 28p per day for gas
An equivalent scheme for businesses called the Energy Bill Relief Scheme has been launched and will be in place for six months starting on 1 October 2022.
Click below to find out more about eligibility, unit rates and how the Energy Bill Relief Scheme will work in practice.
1
Eligibility
The scheme will be available to everyone on a non-domestic contract including:
- Businesses
- Voluntary sector organisations, such as charities
- Public sector organisations such as schools, hospitals and care homes
who are:
- On existing fixed price contracts that were agreed on or after 1 April 2022
- Signing new fixed price contracts
- On deemed/out of contract or variable tariffs
- On flexible purchase or similar contracts
2
Rates
For all non-domestic energy users (businesses) in Great Britain, the government supported price has been set at:
- £211 per megawatt hour (MWh) for electricity
- £75 per MWh for gas
For comparison, wholesale costs in England, Scotland and Wales for this winter are currently expected to be around:
- £600 per MWh for electricity
- £180 per MWh for gas
3
How it works
Suppliers will apply reductions to the bills of all eligible non-domestic customers.
The government will compensate suppliers for the reduction in wholesale gas and electricity unit prices that they are passing onto non-domestic customers.
For fixed contracts, the discount will reflect the difference between the government supported price and the relevant wholesale price for the day the contract was agreed. The government will publish the wholesale prices that will be used for calculating this for each day from 1 April 2022.
For variable, deemed and all other contracts, the discount will reflect the difference between the government supported price and relevant wholesale price, but be subject to a ‘maximum discount’ that will be determined at the beginning of the scheme.
Businesses on variable/flexible contracts will need to choose if they move to fixed contracts. This is likely to suit you if you don’t want to be exposed to price variation. You will be contacted by your supplier.
4
Review of the scheme
The government will publish a review into the operation of the Energy Bill Relief Scheme in January 2023, to inform decisions on future support after March 2023.
The review will focus in particular on identifying the most vulnerable non-domestic customers and how the government will continue assisting them with energy costs.
These are likely to be for those who are least able to adjust, for example by reducing energy usage or increasing energy efficiency.
Next steps…
- Check out our guide on making energy efficiency savings in your business.
- Learn more about how inflation affects your business.
- Access advice, tools and resources in UMi’s cost of trading crisis bundle.