The Energy Bill Relief Scheme - what your business needs to know

The Energy Bill Relief Scheme - what your business needs to know
Following the announcement on 8 September 2022 by government of a major support package to help businesses with their energy costs this winter, further details have been published by the Department for Business, Energy and Industrial Strategy (BEIS).

According to the government, the Energy Bill Relief Scheme (EBRS) ‘will see energy prices for non-domestic energy customers such as businesses, charities and public sector organisations cut – protecting them from rising energy costs.’

The recent insight from our Business Energy Tracker report revealed that 77% of businesses said energy was their biggest risk, so this will undoubtedly be welcome news for many organisations this winter.

EBRS - the key points for business
We’ve outlined the main headlines below:
  1. The government will set a Supported Wholesale Price which is currently expected to be £211/MWh for electricity and £75/MWh for gas, which BEIS says is less than half the wholesale prices predicted this winter. Government will provide funding to energy suppliers to enable a discounted price per unit of gas and electricity to be passed onto business customers. This means that wholesale prices in excess of these levels will be automatically reduced by the relevant p/kWh over the life of the scheme. Confirmation on the Supported Wholesale Price levels will be made on 30 September 2022.
  2. The discount includes the removal of green levies paid by non-domestic customers who receive support under the scheme.
  3. The scheme will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts, with a six month duration for energy usage from 1 October 2022.
  4. How it will be applied will depend on the type of contact you are on. While fixed contracts are relatively straightforward, those on deemed, variable and flexible tariffs will receive a per-unit discount on energy costs based on the difference between the Supported Wholesale Price and the Average Expected Wholesale Price over the period of the Scheme, up to a Maximum Discount, likely to be around £405/MWh for electricity and £115/MWh for gas (also to be confirmed on 30 September).
  5. Businesses will be offered the chance to move to a fixed tariff. The government is working with suppliers to ensure all customers (including out of contract) are given the opportunity to switch to a fixed contract/tariff for the duration of the scheme if they wish.
  6. Emergency legislation will be introduced to underpin the scheme once Parliament is back from recess in October.

As the Energy Bill Relief Scheme progresses through the Parliamentary process, it is feasible that some of the detail in today’s announcement could change.

When will I see a reduction on my energy invoice?
The systems to deliver the scheme still need to be set up, so BEIS has indicated that business customers will start to see the savings in November when the October invoices are typically issued.

What if my business still needs support after six months?
BEIS has committed to publishing a review of the scheme in three months that will inform decisions on future support after March 2023. The review will focus on identifying those sectors most in need of further support, and then outline how the government will continue to assist them with energy costs.

What about energy efficiency?
This scheme is purely to help businesses with the short-term issue of rising energy costs this winter. However, we believe there is a need for a longer-term vision, including more support for businesses to enable them to reduce overall energy consumption.

There is a real need to accelerate energy efficiency initiatives, whether that is through targeted incentives or extending schemes that provide tax breaks for installing more efficient equipment. While short-term support is undoubtedly needed, we can’t afford to lose sight of the long-term net zero goal.

What are the next steps?
We will be working closely with BEIS to further understand the details of how these measures are implemented, and we will proactively be in touch with you to discuss how they will impact your organisation.

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