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Current Outlines of the Government Energy Bill Relief Scheme

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Business Secretary Jacob Rees-Mogg released a statement yesterday (21 September 2022) that has outlined the new support initiative for households, businesses and public sector organisations facing the enormity of rising energy bills in Great Britain and Northern Ireland.

What we know so far:

Government will work with suppliers to reduce wholesale energy costs. The government will also provide a discount on wholesale gas and electricity prices for all non-domestic customers, this includes:

  • All UK businesses.
  • The voluntary sector like charities.
  • The public sector such as schools and hospitals.

Will this apply to your energy contract?

  • Please note the terms of this scheme to see whether it applies to your organisation.
  • If your organisation is eligible, based on current information, you will not have to do anything.
  • 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.

“It will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1 October 2022 to 31 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.” (Press release: Government outlines plans to help cut energy bills for businesses).

The Supported Wholesale Price will most likely be as follows:

  • £211 per MWh for electricity.
  • £75 per MWh for gas.

The level of price reduction for your organisation will be dependent on your contract type and circumstances.

Customers on existing fixed priced contracts:

Are eligible for support if the contract was agreed upon after 1 April 2022. Provided that the wholesale element you are paying is above the Government Supported Price. Your per unit energy costs will be reduced by the relevant p/kWh for the duration of the scheme. Customers entering new fixed price contracts after 1 October 2022 will receive the same support.

Customers on default, deemed or variable tariffs:

Will receive a per-unit discount on energy costs, up to the maximum difference between the supported price and the average expected wholesales price over the period of the Scheme.

Likely, £405/MWh for electricity and £115/MWh for gas. Dependent on market conditions.

Non-domestic customers on default or variable tariffs will therefore pay reduced bills, but these will change over time and may be subject to price increases.

The Government is working with suppliers to ensure all their customers in England, Scotland and Wales are given the opportunity to switch to a fixed contract/tariff for the duration of the scheme if they wish, underpinned by the Government’s Energy Bill Relief Scheme support.

For customers on flexible purchase contracts:

The level of reduction/discount offered will be calculated by suppliers according to the specifics contract and will also be subject to the Maximum Discount.

Northern Ireland:

A parallel scheme, based on the same criteria and offering comparable support, but recognising the different market fundamentals, will be established in Northern Ireland.

Further details relating to consumers not connected to the gas or electricity grid will be announced shortly but the equivalent support will also be provided.

The Government will be reviewing the scheme in three months’ time, to inform businesses whether there will be additional support after March 2023. This review will focus on identifying the most vulnerable non-domestic customers and how the Government can continue assisting them with their energy costs.

When will this be confirmed?

There is still additional information to come however for the scheme to work effectively emergency legislation is being introduced to underpin the scheme. This is subject to standard parliamentary process for emergency legislation which will only be introduced once parliament is back from recess in early October. This will also be Parliamentary scheduling dependent.

How can OEM help?

We are still clarifying all of the details related to the Energy Bill Relief Scheme, please keep an eye out for any updates from OEM, as the situation evolves.

For further information or any assistance with your energy strategy, please contact your Account Manager or contact us on sales@openenergymarket.com.