20 Dec The Energy Bill Relief Scheme : What is it and how does it work ?
Energy prices were seeing unprecedented rises and businesses were in a terrible catch 22 situation.
The perfect storm with the War in Ukraine, supply restrictions into the UK and sanctions on Russia along with Brexit/EU issues caused the energy prices to soar.
If they hadn’t already renewed a contract earlier in the year, looking to secure prices at unprecedented high rates were causing businesses to consider shutting down and something had to be done.
The government stepped in originally setting out a plan for a business PRICE CAP to help support businesses. However this was soon changed and the Energy Bill Relief Scheme was introduced instead. The U- turn from the government meant that businesses that had agreed a contract were eligible for a discount on the price they pay to a supplier, this meant businesses had to secure a contract in the worst time to secure the discount.
Find out about the Energy Bill Relief Scheme (EBRS) for non-domestic customers and how you can get support this winter.
The amount of your bills will be reduced
For all non-domestic energy users in Great Britain and Northern Ireland this government supported price has been set at:
electricity – £211 per megawatt hour (MWh) / 21.1p per kilowatt hour (KWh)
gas – £75 per MWh / 7.5p per KWh
For comparison, when the scheme was announced, wholesale costs in England, Scotland and Wales for this winter were expected to be around:
electricity – £600 per MWh / 60p per KWh
gas – £180 per MWh / 18p per KWh
To ensure a level of support comparable to the domestic scheme and consistency between the domestic and non-domestic schemes, the government supported price is based on the implied wholesale element of the Energy Price Guarantee. However, the final per unit price paid by non-domestic customers will differ as it will also reflect other costs such as network charges and operating costs, plus the impact of competition between suppliers. The Energy Bill Relief Scheme is not subject to a price cap review, unlike the Ofgem price cap for the domestic market and the approach taken by the Energy Price Guarantee.
How it works
Applying the reduction
Suppliers will automatically apply reductions to the bills of all eligible non-domestic customers. Customers do not need to apply for their discount.
If you think your supplier is not applying the discount correctly, you should contact your supplier in the first instance.
The government will compensate suppliers for the reduction in wholesale gas and electricity unit prices that they are passing on to non-domestic customers.
The discount applied will be in pence per kilowatt hour (p/kWh). The p/kWh government support for comparable contracts will be the same across suppliers, but the absolute level of individual bills will continue to vary across different contracts and tariffs.
Suppliers are required to ensure that where discounts are being applied under the scheme, they are subject to a minimum supply price set at the government supported price for gas and electricity. More information on this has been provided in the rules and guidance published on the Energy Bill Relief Scheme (EBRS): scheme documents page.
For fixed contracts the discount will reflect the difference between the government supported price and the relevant wholesale reference price for the day the contract was agreed. We publish the relevant wholesale prices we will use for calculating this for each day from 1 December 2021.
Customers who signed their fixed rate contract before 1 December 2021 will not have been exposed to volatile wholesale prices, so will not be eligible for support under the scheme
Variable, deemed and all other contracts
For variable, deemed and all other contracts, the discount will reflect the difference between the government supported price and relevant wholesale price, but be subject to a ‘maximum discount’:
electricity – £345 per MWh
gas – £91 per MWh
We publish the discounts for fixed and variable contracts, alongside the relevant reference wholesale prices on a weekly basis.
Businesses on variable / flexible contracts will need to choose whether they move to fixed contracts. This is likely to suit businesses who don’t want to be exposed to price variation. You will be contacted by your supplier.
The p/kWh government support for comparable contracts will be the same across suppliers, but the absolute level of individual bills will continue to vary.
Out of contract and deemed tariffs
For out-of-contract and deemed tariffs, the regulations set out the following process for suppliers to apply the discounts to customers.
A supplier must apply both:
- a) the relevant wholesale price discount and
- b) the discount for qualifying financially disadvantaged customers (QFDCs), if applicable, as set out in Part 5 of the EBRS GB Regulations and the EBRS NI Regulations.
Part 5 of the Regulations makes separate provision for suppliers to provide an additional discount for certain QFDCs. The aim is to mitigate the financial disadvantage experienced by QFDCs in obtaining an affordable supply of energy. This may be, for example, due to their poor credit rating or because of their high energy usage.
For more information on how this works