What is the Energy Bill Relief Scheme?

Energy costs for UK businesses, charities and public sector bodies will be cut, as the government has launched the Energy Bill Relief Scheme.

The initiative follows PM Liz Truss’s 8 September announcement that businesses would receive a six-month support package for their energy bills. The scheme has been outlined by business secretary, Jacob Rees-Mogg, and the discounts will be applied automatically by suppliers to energy usage between 1 October 2022 and 31 March 2023. A similar scheme will be established in Northern Ireland.

According to the government website, 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

Discount levels

The government will provide a discount on gas and electricity unit prices. To calculate this discount, the estimated wholesale portion of the unit price you would be paying this winter will be compared to a baseline ‘government supported price’. This is lower than currently expected wholesale prices this winter.

For all non-domestic energy users in Great Britain this 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

A review will be published in early 2023. Richard Lambert, NHBF chief executive, comments: “The energy support announced is a lifeline for many businesses in the hair & beauty sector that have battled through the last two years. The government has listened, and we will be providing further evidence to make the case for hair & beauty as a ‘vulnerable industry’ needing support after the initial six-month period has ended.”

Fixed contracts

The discount will be based on the difference between the government-supported price and the wholesale price for the day that the fixed contract started. The government will publish the wholesale prices and will use for calculating this for each day from 1 April 2022. 

Variable, deemed &  all other contracts including those due to renew

The discount will reflect the difference between the government supported price and relevant wholesale price but will be subject to a ‘maximum discount’ that will be determined at the beginning of the scheme.

If you are on a variable or flexible contract, you will need to choose if you want to move to a fixed contract. This is likely to suit you if you don’t want your price to keep changing each month. Your supplier should be in touch to discuss this.

Example

A small retail shop uses around 1 MWh of electricity and 2 MWh of gas each month and is on a variable contract, giving them a current monthly energy bill of around £1,400 per month. As they are on a variable contract, they can receive support up to the maximum discount (currently estimated to be £405/MWh for electricity and £115/MWh for gas). Applying the maximum discount rates means that their monthly energy bill reduces by around 45%, leaving them with a bill of around £800 per month.

For more advice & information about the Energy Bill Relief Scheme, visit the UK government website.