The Energy Bill Relief Scheme
– Cutting energy bills for UK businesses, charities & public sector organisations.
Current gas and electricity prices have been significantly inflated in light of global energy prices. 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.
The measures being introduced aim to support growth, prevent unnecessary insolvencies and protect jobs to help relieve the huge pressure UK businesses are under.
Details of the Energy Bill Relief Scheme
The Government has set a Supported Wholesale Price – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter – which is a discounted price per unit of gas and electricity. This support will be equivalent to the Energy Price Guarantee put in place for households.
Access to the Energy Bill Relief Scheme
The discounts will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts.
It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period for all non-domestic energy users.
The savings will be first seen in October bills, which are typically received in November.
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.
How will my business benefit from the Energy Bill Relief Scheme?
The level of price reduction for each business will vary depending on their contract type and circumstances:
Non-domestic customers on existing fixed price contracts
These customers will be eligible for support as long as the contract was agreed on or after 1 April 2022. 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 1 October will receive support on the same basis.
Non-domestic customers on default, deemed or variable tariffs
These customers 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 amount of this Maximum Discount is likely to be around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market developments. Non-domestic customers on default or variable tariffs will therefore pay reduced bills, but these will still change over time and may still be subject to price increases.
The Government is working with suppliers to ensure all their customers in England, Scotland and Wales are given the opportunity 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.
Businesses on flexible purchase contracts
For businesses on flexible purchase contracts, typically some of the largest energy-using businesses, the level of reduction offered will be calculated by suppliers according to the specifics of that company’s contract and will also be subject to the Maximum Discount.
What next?
Industry groups welcomed the package but warned further support may be needed after the winter.
It is understood the scheme will be reviewed after three months with an option to extend support for “vulnerable businesses” – but it is not known what sectors come under the category.
Growing businesses need more from their accountant; as business accountants, analysts and advisors, we help you understand and manage your numbers to drive plans and decision making. If you would like to discuss the ways we can help you and your business, simply call 0800 112 0880 or email [email protected].
Source: https://www.gov.uk/government/news/government-outlines-plans-to-help-cut-energy-bills-for-businesses