For business energy consumers in the UK, relief has arrived with the recent launch of a new energy bill relief scheme that makes it easy to find and apply for relief from rising energy bills. In September the UK’s former business secretary Jacob Rees-Mogg announced more details on how the energy bill relief scheme (EBRS) will work and provide targeted assistance to consumers struggling with skyrocketing energy costs due to changes in circumstances over which they have no control.
The government has partnered with trusted professionals from the financial services industry to help those who need it most get the assistance they deserve. If you’re struggling with your energy bill, you may still be able to get some relief. Let’s take a look at how you can do that:
Who is eligible for the scheme?
With exceptions, the scheme will reduce energy bills for businesses, charities and public sector organisations for six months, from 1 October 2022 to 31 March 2023 and it applies to everyone on a non-domestic contract, regardless of size.
It does not apply to fixed price contracts agreed before 1 April 2022, as this was before wholesale prices significantly increased.
The scheme is intended to have exclusions, such as businesses that use gas or electricity to generate power to sell back into the grid, such as power stations, pumped hydro, or grid-level battery storage.
Further eligibility requires these businesses to be on an existing fixed price contract that was agreed on or after 1 December 2021, signing a new fixed price contract, on deemed / out of contract or variable tariffs, or on a flexible purchase or similar contract. Suppliers will automatically apply the reduction as a discount on your bill, similar to how your current domestic bill looks.
How much money can be saved?
The government will discount your gas and electricity unit prices. To determine your discount, the estimated wholesale portion of the unit price you will be paying this winter, will be lower than average retail prices this winter.
The discount will be calculated by the estimated wholesale price of the unit in GB of £211 per megawatt-hour (MWh) for electricity and £75 per MWh for gas, as well as in pence per kWh (p/kWh).
So the unit price you pay for energy will be capped at the government-supported price. For comparison, wholesale costs in GB this winter are expected to be around £600 per MWh for electricity and £180 per MWh for gas.
The GB and Northern Ireland schemes will offer similar levels of support, but the impact on users will vary in Northern Ireland due to the limited number of fixed-price contracts in the market.
The EBRS will be reviewed in March 2023 to inform decisions on future support. It seems the scheme will continue in some form for the most vulnerable non-domestic customers.
Do I need to apply for the scheme?
You don’t have to apply, all eligible non-domestic customers will be reimbursed by the government for the decline in wholesale gas and electricity unit prices that they are passing to non-domestic customers.
The discount will be in pence per kilowatt hour (p/kWh), according to the same across providers, but individual bills will continue to vary across different industries and tariffs.
The discount for fixed contracts would reflect the difference between the government-funded price and the appropriate wholesale price on the day the deal was decided. The government will publish the wholesale prices for calculating this for each day from 1 December 2021.
The discount would differ between the government-subsidized price and the relevant wholesale price for variable, deemed, and all other industries, but not subjected to a ‘maximum discount’ (£345/MWh for electricity and £91/MWh for gas).
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 may be contacted by your supplier.
Third-party intermediaries (TPIs) / energy brokers cannot influence the per-unit cost reductions that will be applied to energy costs under the scheme. Appropriate reductions will be automatically applied to your bills without needing to take out a new contract or change your existing contract.
Reviewing the scheme in March 2023
The government plans to review how the scheme is working in March 2023 and use that information to decide if and how to continue supporting vulnerable non-domestic customers with energy costs after that date.
The people who are least able to adjust to rising energy costs are likely to be the most affected. This includes those who are unable to reduce their energy usage or increase their energy
The review will consider the following:
- how effective the scheme has been in providing support to non-domestic customers who needed it.
- which non-domestic customer groups are particularly vulnerable to energy price rises, given the latest prices and other cost pressures
- how can the government continue supporting these customers – One option is to extend the existing scheme for some users. Another option is to replace the scheme with a different one.
It is important that users who are less vulnerable to energy price increases (particularly larger businesses that are not energy-intensive) use the 6 months of support provided by the scheme to identify measures they can take to protect themselves against high energy prices.
Full details are posted on the gov.co.uk website: Energy bill relief scheme for businesses
With the whole of the energy sector still being up in arms regarding bills, the government has given your business a lifeline and at the date of this posting, you might already be receiving the discount if you follow the requirements.
Even with schemes like these, your bill will likely be eight times higher than it has previous bills.
If you feel that Business Energy Claims can help you, please don’t hesitate to contact us to check if you can make a claim which might be able to cover your increase or at least ease the blow to your bank balance.
What you can do in the meantime is look at your business finances and see what you can do to limit spending in preparation for the March 2023 review.