Yesterday the Government announced its plan for how to support businesses through the current period of exceptionally high energy prices. The Energy Bill Relief Scheme is the method by which the Government will provide a discount on wholesale gas and electricity prices for all non-domestic customers.
- It will apply to fixed contracts agreed on or after 1st April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1st October 2022 to 31st March 2023, running for an initial 6-month period for all non-domestic energy users. The savings will be first seen in October bills, which are typically received in November.
- 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.
- To administer support, 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 includes the removal of green levies paid by non-domestic customers who receive support under 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.
- 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.
- Non-domestic customers on existing fixed price contracts will be eligible for support as long as the contract was agreed on or after 1st April 2022. Customers entering new fixed price contracts after 1 October will receive support on the same basis.
- The Government will publish a review into the operation of the scheme in three months to inform decisions on future support after March 2023. The review will focus in particular on identifying the most vulnerable non-domestic customers and how the government will continue assisting them with energy costs.
Full details of how the scheme will operate are available here.
Over recent months, we have sought to make clear to the Government that there is a need for a bespoke business support programme. However, we are keen to ensure that in our ongoing engagement with Government and other stakeholders that our insights are closely informed by the experience of our Members. As such we would be grateful if someone in your business could answer the questions below:
- Are you concerned about the increases in energy prices, and over what timescale do such changes become a threat to your business?
- What steps have you taken to reduce your energy costs through reducing consumption (energy efficiency, sustainability measures etc)?
- What steps have you taken to reduce your energy costs through hedging or other methods not related to reducing consumption?
- What steps are you taking to prepare for reasonable worst-case scenario impacts to supply chains this winter?
- Have you put in place any provisions to support your employees facing higher energy costs or do you have plans to so?
- Will the energy price spike increase or decrease the priority of sustainability in your business?
- Is this crisis pushing your business to shift towards greater use of renewable energy?
- What is your assessment of the support for businesses announced yesterday by the Government and what more information/support do you feel is necessary?
- Would you define your business as 'vulnerable' under the terms of the Government business support plan above? If so, why?
- Thinking about the energy costs issue, from 1-10 how optimistic are you about economic prospects for your business in the next 6 months, 1 year, 2 years and 5 years?
Thank you in advance for your support in helping us to collect this information.
Please email your answers, or any other thoughts you have on the impact of the Energy Bill Relief Scheme, to our public policy team here.