The Energy Bill Relief Scheme and the Energy Bills Discount Scheme
The government’s Energy Bill Relief Scheme (EBRS) ran from 1 October 2022 until 31 March 2023, when it was replaced by the Energy Bills Discount Scheme (EBDS). Find out how different businesses are supported by the EBDS here.
The way that the EBRS was applied to your organisation will have depended on a number of factors, including whether you were on a fixed, flexible, deemed or variable contract while the scheme was in place. If you would like more information on the support that the EBRS offered, watch our webinar or read our FAQs.
The EBRS webinar
Led by Helen Gardner, Market Policy Change Lead, and supported by:
- Stephen Evans from our Industry Charging Team
- Rob Finch from our Regulation Team
- Matt Gallagher from our Market Policy Change Team
- Matt Cullen from our Policy Team
Watch our webinar to understand how the EBRS was applied to your business.
EBRS FAQ’s
These FAQs focus on the EBRS and were created while the scheme was in operation. For more information on the EBDS, visit our dedicated webpage.
Key points for fixed price contracts
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 we will use for calculating this for each day from 1 December 2021.
The pence per kilowatt hour (p/kWh) government support for comparable contracts will be the same across UK suppliers, but the absolute level of individual invoices will of course continue to vary.
The support will be automatically applied to all qualifying eligible invoices. Customers do not need to take action or apply to the scheme.
If a customer has agreed a fixed price contract/tariff on or after 1 December 2021, they will receive support if the calculated wholesale element of the price they are paying is above the government supported price.
If their fixed contract prices/tariff is based on wholesale prices below the government supported price, then they will not be eligible for support.
If they are about to sign a new fixed price contract, the relevant price reduction will be automatically applied to their invoice by their supplier.
Please refer to the latest guidance from the Department for Business, Energy and Industrial Strategy (BEIS), here: gov.uk/government/publications/energy-bill-relief-scheme-discounts-for-fixed-default-and-variable-contracts
Key points for flex customers
If a customer is on a flexible purchase contract, their price reduction will depend on the difference between their monthly weighted average price (WAP) - determined by their individual hedging approach - and the government supported price. In this case, the maximum support available per unit of energy will also be limited by the maximum discount.
The discount applied will be in p/kWh.
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
- The initial maximum discount rate has been set at £345/MWh for electricity and £91/MWh for gas, this is still subject to change based on wholesale market developments
Non-domestic suppliers and consumers must not profit from the scheme other than for its intended purpose of providing relief on necessary energy invoices. Any such activity will result in support being refundable to the government and may be liable to further penalties.
Please refer to the government guidance for a broad description of how the scheme will operate: gov.uk/guidance/energy-bill-relief-scheme-help-for-businesses-and-other-non-domestic-customers
Scroll down for more Q&As on the following topics; general questions, fixed contract information, flexible contract information, out of contract information and information for energy consultants.
General
Q: Taking into account the announcement to subsidise energy costs, where does this leave customers when it comes to the current tariffs being charged?
A: The Energy Bill Relief Scheme is intended to apply from 1 October 2022 until 31 March 2023 and will impact prices for this period (there is a review of the scheme after three months when the scheme may continue, could change, or stop).
Q: What is the ‘maximum discount’ referenced in the government’s announcement?
A: This is the maximum level of discount (p/kWh) that can be achieved through the operation and application of the scheme. This applies to customers who are on deemed, default or flexible purchasing products.
Q: Will npower Business Solutions (nBS) invoice monthly, or after the six month period?
A: The current intention is to apply the discount on customer’s monthly invoices from October onwards (i.e. on their October invoices which would land with customers in November). We are currently looking at our technical capabilities to understand how this can be best achieved in our invoicing processes.
Q: Does the scheme apply to contracts agreed in October 2021?
A: For fixed price contracts, the scheme will apply to contracts agreed on or after 1 December 2021 (for qualifying customers). For other types of contracts (including flex contracts, deemed/default contracts or other variable contracts), the contract agreed date is not part of the eligibility criteria.
Q: Is there any limitation on business size in qualifying for EBRS?
A: No, this is not a qualification criteria.
Q: Does the scheme apply to public sector customers, i.e. schools and academy trusts?
A: The scheme applies to all business types (i.e. non-domestic) including private and public organisations.
Q: How does the EBRS get applied if a customer has fixed and variable tariffs for gas and electricity?
A: The supplier shall apply the relevant scheme arrangements for each type of contract by fuel type, and each contract will be treated individually according to the guidelines within the scheme for the product type within the contract.
Q: What guidance can be provided on the approximate p/kWh arising from the implementation of the £211/MWh and £75/MWh commodity costs for electricity and gas respectively?
A: The ‘government supported price’ in p/kWh can be broken down to electricity at 21.1p/kWh and gas at 7.5p/kWh, and this will be used to calculate the discount level by reference to the relevant wholesale commodity costs. Actual discounts will ultimately depend on actual consumption (for the period) for the tariff product and commercial contractual terms a customer is on.
Q: Will there be any impact on Targeted Charging Review (TCR) charges?
A: No, TCR charges are network charges and thus unaffected by the EBRS.
Q: As the EBRS applies to the wholesale price, what, as a percentage, is the wholesale element to the total costs charged?
A: There is no single answer, the percentage of the wholesale element will vary depending on many attributes, such as: type of contract, when the contract was signed (for fixed contracts), the customer usage profile, and the nature of the end user’s business. Wholesale costs will therefore be unique to an individual customer and its purchasing arrangements.
Q: How will gas used by combined heat and power (CHP) be treated where some (but not all) of the electricity generated is exported to the grid?
A: One of the exclusions to access the scheme is in instances where gas/electricity is used to generate electricity back to the grid. However, gas used to generate steam, and electricity used by the customer directly, is eligible for the discount.
Q: How and when will this show up on invoices?
A: The scheme came into effect from 1 October, and we are developing our technical solution to determine how information will be shown on the invoice. The earliest this will appear is on November invoices for consumption in the October period. nBS will be including a new line on the invoice for the discount. The new line will show the p/kWh discount rate, the consumption quantity it applies to and the £s benefit of the discount for the invoiced period.
Q: How will the price cap benefit be passed on to customers?
A: The EBRS scheme is not a cap, it is a discount applied to the wholesale element of the customer charge and will vary depending on the product, tariff and commercial terms a customer has in place (and for fixed contracts the date on which they were agreed). The discount will be automatically applied by the supplier to the wholesale element of the invoice and confirmed to the customer via means we are developing.
Q: Will the maximum discount rates and government supported prices be adjusted during the six month period - depending on market developments such as price volatility?
A: The government has reserved the right to make amendments to the supported prices and maximum discount rates during the course of the scheme operation. The indication we have been given is that the supported prices will not be changed, and the maximum discount will not be increased but could be reduced if (in the government’s analysis and opinion) market prices have fallen sustainably (please note, where reduced, the support prices and discount rates may not be automatically increased in the event that wholesale costs rise).
Q: What is the likelihood of extending the Supported Wholesale Price to the rest of year/summer 2023?
A: The government has indicated a review will be taken three (3) months into the scheme, and a decision taken on the continuation of the scheme, with the possible outcomes being: (i) continuation of the scheme as currently set out; (ii) continuation in a different form e.g. targeted to vulnerable sectors; or (iii) cessation of the scheme. Ultimately, at this early stage and with so many external variables, it is difficult to give an answer with any level of confidence. With the recently changed political landscape, government has announced a Treasury review of all energy support schemes and packages.
Q: Has there been any guidance on those industry sectors or businesses that will be classed as energy vulnerable beyond March 2023?
A: Not that we are aware of beyond what has been speculated in the media, e.g. hospitality. See previous answer regarding Treasury review to follow in due course.
Q: How will the scheme affect maintained schools?
A: There is no segmentation by different business types within the scheme as it stands.
Q: If a customer has a very large shape fee for this winter season, could they buy extra base load to lower their shape fee?
A: Non-domestic suppliers and consumers must not profit from the scheme other than for its intended purpose of providing relief on necessary energy invoices. Any such activity (i.e. change in purchasing decisions) will result in disqualification from the scheme, and any support received being subject to recovery and clawback by the government, and may leave parties liable to further penalties.
Q: Will nBS be speaking to database suppliers too in terms of ensuring things are in place to enable the loading of invoices?
A: We are advising all customers and impacted third parties we are aware of about how we intend to implement the scheme and any changes to invoices.
Q: If the discount received from gas purchased to run a CHP plant is greater than the revenue a customer would receive by selling electricity to the grid, is there any benefit at all to sell to the grid?
A: Energy used to produce electricity to sell to the grid does not qualify for the support scheme. Non-domestic suppliers and consumers must not profit from the scheme other than for its intended purpose of providing relief on necessary energy invoices. Any such activity will result in disqualification from the scheme, and any support received being subject to recovery and clawback by the government, and may leave parties liable to further penalties.
Q: At the end of the scheme, what happens if a customer has not used the volume of electricity or gas that has been bought for them?
A: This would depend on the type of product and the contract terms for the supply agreement. The EBRS discount operates on the consumption over the qualifying period, not the forecasted volume.
Q: Are Renewable Energy Guarantees of Origin (REGO) certificate prices affected at all?
A: No, not by the EBRS.
Q: What happens if a customer changes supplier during the support scheme – would they receive the discount?
A: All suppliers are required to operate the scheme in accordance with the regulations.
Q: How are companies protected against increases in standing charges and non-commodity charges?
A: This is not covered by the EBRS.
Q: Does the price cap still apply if a customer is on a private network not supplied via National Grid?
A: No, the EBRS discount does not apply. Based on our current understanding of the scheme, electricity purchased from licensed suppliers will attract the EBRS discount, but electricity purchased under private wire/network will not qualify for the EBRS scheme.
Q: Is a sole trader/commercial user that is not a limited company eligible for the scheme?
A: Yes, if a customer has a commercial business (i.e. non-domestic) contract they will qualify for the scheme where they meet the eligibility criteria.
Q: How does the scheme impact nBS’s Market Access offering?
A: The scheme does not impact this offering.
Q: What happens to companies that have hedged financially?
A: Customers will be required (via legally binding obligation) to disclose any financial hedges, instruments or other arrangements that offset their commodity costs (outside of the supply contracts) to the government and their supplier. The level of discount they receive under the EBRS scheme will be adjusted to take account of the benefit of the financial hedge, instrument or other arrangement.
Q: What happens to customers who import/export?
A: It would depend on the specific arrangements that the customer has in place.
Q: If trading month ahead, will customers still be able to get the discount as it will not be fully purchased before October 2022?
A: Yes, as long the customer’s monthly WAP is above the supported price they will be eligible for the scheme.
Q: If a customer moves to another supplier during the winter 2022 period, will nBS still provide the government supported price for the period they are supplied by nBS?
A: Yes, customers that are eligible for the scheme will receive the adjustment for any months they are on supply with nBS between October 2022 and March 2023.
Q: Does the government announcement change nBS’s view on hedging further out by more than one month?
A: There are multiple factors that affect the ability to trade for longer periods. The government scheme does not explicitly change the market dynamics.
Q: When can customers expect to receive a quote from nBS that will include the price discount?
A: The quote will not include the price discount. The government subsidy will be applied to invoices post contract for the duration of the Energy Bill Relief Scheme.
Q: Does the scheme include all meter types (e.g. UMS)?
A: Yes.
Q: How would a customer translate £211 MWh onto their contracted price which is a day and night rate p/kWh?
A: The discount rates will be published by BEIS in due course. This is to be a single p/kWh rate that will apply to both day and night consumption for the invoice period.
Q: Will there be a discount applied to customers’ standing and capacity charges?
A: No.
Q: Do customers need to apply to get the discount?
A: No.
Q: How will the scheme work for tenants of a rented property?
A: Where nBS invoices the tenant directly as customer, the discount will be applied to the customer invoice for the duration of the Energy Bills Relief Scheme. Where nBS invoices the landlord as the customer, then it will the responsibility of the landlord to consider how any discount is passed through to their tenants (complying with any relevant legal and/or contractual requirements).
Q: Can customers choose to have a longer term contract instead of the discount?
A: No.
Q: How does the scheme work for renewables and pass-through contracts?
A: Renewables will continue to be invoiced on pass-through contracts. Based on our understanding of the scheme, we will continue to invoice green levies from 1 October, but the discount provided by the scheme will then remove their impact on customer invoices this winter. Please note that BEIS has not yet confirmed which green levies are included, or what it has calculated them to be.
Q: What happens for customers on dual fuel?
A: The fuels will be managed individually/independently, so any discounts will be applied to the invoices for each fuel.
Q: Will new contracts require a security deposit? If so, what will happen if the customer cannot afford to pay it?
A: Contracts will remain subject to our existing credit policy, which will determine where and when a security deposit is required.
Q: Will there be any impact on volume tolerance breaches?
A: The treatment of volume tolerance breaches is now included in the scheme. The supplier will need to ensure that if/when they calculate any volume tolerance breach (costs or benefits) for the period October 2022 – March 2023, they apply the appropriate discount to the wholesale cost used. This means that benefits and costs could be reduced, depending on prevailing costs.
Q: If a customer is in a fixed contract until October 2023, should they do anything now or wait for prices next year?
A: If a customer is in a fixed contract that was agreed after 1 December 2021, they may still receive a discount from the Energy Bill Relief Scheme if the wholesale prices used to calculate their contract were higher than the government’s supported price (the government is due to publish more information on the rates that will be used to calculate this). Otherwise, customers should be advised to speak to their Client Lead about the best time to look at their next contract price from October 2023 onwards.
Q: Will all suppliers be offering the same rate/discount and am I free to shop around?
A: If a customer is already in a fixed term contract, the scheme does not give them the opportunity to exit their current fixed term contract. If they are not in a fixed term contract, then they are free to consider what other products and prices may be available from other suppliers. All suppliers will be required to apply the same discount rate (p/kWh) based on the government scheme.
Q: If a customer’s contract ends within the scheme period, do they still need to agree a new contract or will their rates be discounted automatically?
A: As under normal circumstances, customers will move onto default rates if they do not agree a renewal or move to another supplier. Default prices will also be eligible for the government discount. For clarity, the discount only applies to the wholesale commodity element of the total price. Out of contract rates will still be higher than the fixed contract prices we can offer customers and are subject to the maximum discount rate.
Q: Will the discount on the fixed price be capped?
A: The discount rate for fixed will be published by the government based on its view of the difference between the wholesale commodity market prices for a given date and the supported price. The published maximum discount rate does not apply to fixed price contracts.
Q: Will the p/kWh discount be the same for the whole winter, based upon the published discount for the day the contract was signed?
A: For fixed contracts, the discount rate will be the same for the whole winter period (October 2022 – March 2023) and will be based on the BEIS-published discount rate for the day the contract was signed.
Q: If a customer signs a 24-month contract, is the discount pro-rata?
A: For fixed price contracts, the discount will be applied in respect of consumption during the winter period only (October 2022 – March 2023), irrespective of the contract length. The BEIS-published discount rate will be the same for all contracts signed on a given date. However, there is a floor price mechanism which ensures a customer’s rates will not be discounted below a given threshold, in order to avoid a situation where a customer could receive negative unit charges.
Q: In respect of fixed Non-Half Hourly (NHH) or Half-Hourly (HH) contracts, is the wholesale price taken at point of sale, i.e. fixed for the length of the contract, or does it vary if purchased by the supplier at different periods?
A: For fixed price contracts, the level of discount is set for the duration of the scheme (October 2022 – March 2023) and is based on the contract signature date.
Q: If a customer is on a fixed rate contract below the government cap level, will the reduced/removed green levies apply to their invoices?
A: The scheme is a discount and not a cap. If the customer’s fixed rate arrangements are below the government discount level they will not qualify for any support.
Q: What happens to fixed contracts that contain backdates?
A: Where a supplier agrees to backdate a fixed price contract, the discount will be based on the government (BEIS) published rates for the contract signature date.
Q: What happens to customers who have signed a fixed contract for a period that does not cover the full winter period, e.g. a one month contract was signed to cover October only?
A: The government supported discount rate (set by BEIS) would apply to their consumption in October depending on the date their contract was signed. If no renewal contract is agreed, the customer would be moved onto default rates and receive the applicable government discount rate set out under the scheme for default contracts.
Q: Is the floor price also applicable to fixed contracts?
A: Yes, there is a floor price applicable to fixed price contracts. Where a customer’s price is below the floor price, they will not qualify for scheme support.
Q: How will any wholesale supported price impact the shape charge?
A: The discount for flex customers will be calculated based on the difference between the government supported price and the customer’s monthly WAP. The calculated WAP will be compared to the government supported price to create a p/kWh adjustment which will be applied as a discount to the customer’s invoiced volume. Based on the latest guidance, the calculation of the customer monthly WAP will include base load and peak load trades but exclude shape fees.
Q: How will the scheme work for customers that use flexible baskets?
A: For all flex customers, the level of discount they receive will be dependent on the achieved monthly weighted average price. These flexible baskets are treated the same as other flexible purchasing contracts
Q: What happens to flex customers who have peak and residual built into a shape fee, i.e. they only trade base load?
A: The discount rate will be calculated using the monthly weighted average price of base load trades only.
Q: How would the scheme work if hedged position is below GSP for one month (i.e. November 2022) but not for the next one (i.e. December 2022)? Would this mean the customer would still get government support in December 2022?
A: Yes, where qualifying criteria are met, the discount rate will be calculated and applied monthly for flex customers.
Q: Is there any reason for customers to sign up for a new six month supply contract, or should they stay on out of contract rates?
A: For clarity, the discount only applies to the wholesale commodity element of the total price. Out of contract rates will still be higher than the fixed contract prices we can offer customers during this period. However, the customer should decide what is best for them in procuring their energy needs. It should be noted that out of contract rates are subject to the maximum discount rate of £345/MWh for electricity and £91/MWh for gas.
Q: What happens if a customer is on out of contract rates?
A: Deemed and default prices will also be eligible for the government discount. For clarity, the discount only applies to the wholesale commodity element of the total price. Out of contract rates will still be higher than the fixed contract prices we can offer customers. The discount for out of contract rates will be subject to the maximum discount rate set by the government.
Q: What happens if a customer comes out of contract during this six months of support?
A: In the event that a customer comes out of contract (not renewing), the customer shall continue to access the relevant discount level via the default rates the customer is placed onto.
Q: If a customer is on variable default rates, is the max discount calculated against the daily reference prices across each invoicing period, or fixed against the date that the customer became 'out of contract'?
A: There is a single maximum discount rate that will apply to all deemed and default contract types. The discount will apply for any period from 1 October 2022 to 31 March 2023 where the customer is supplied on a deemed or default rate. The maximum discount rate is subject to review by the government, and could fall should wholesale prices reduce, but we do not expect the maximum rate to be increased.
Q: How will the government supported price affect commissions to energy consultants?
A: Consultant commission costs are not used in the calculation of the government subsidy rate so would be unaffected
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