Update: Changes to the Energy Bill Relief Scheme
Update: 9 January 2023
The government has announced a new Energy Bills Discount Scheme (EBDS) for eligible non-domestic consumers in the United Kingdom and Northern Ireland from April 2023 to April 2024.
The current Energy Bill Relief Scheme, which was announced in September, will expire in March 2023. As per the current scheme the government will provide a discount on your gas and electricity unit prices. Eligible non-domestic consumers will now receive a per-unit discount to their energy bills during this 12-month period.
EBDS is designed to balance the need between supporting businesses over the next twelve months and limiting the taxpayer’s exposure to volatile energy markets. All eligible UK businesses and non-domestic energy users including charities and the public sector will receive the discount. The cap for the scheme is currently set at £5.5 billion during this period based on estimated volumes.
How it works:
The government has stated that during the new scheme, eligible businesses who have a contract with a licensed supplier will see:
- A unit discount of up to £6.97/MWh on gas bills, with a price threshold of £107 per MWh
- A unit discount of up to £19.61/MWh on electricity bills, with a price threshold of £302 per MWh
The relative discounts will be applied automatically if wholesale prices are above a certain price threshold, however, they will not be applied on bills with lower energy prices.
Eligible Energy and Trade Intensive Industries (ETII) will receive further support due to their trade exposure, in order to obtain support Eligible Energy and Trade Intensive Industries will have to apply. It’s unclear what this process looks like however, further details on how this will work will be published in due course. Should your organisation qualify, the following will be applicable:
- £40 per MWh discount will be applied to gas with a price threshold of £99 per MWh
- £89 per MWh will be applied to electricity with a price threshold of £185 per MWh.
For a full list of the businesses in this scope, please see the List of sectors eligible for the Energy and Trade Intensive Industries ("ETII") scheme.
Update: 1 October 2022
It has been confirmed that the maximum discount for businesses on flexible, default or variable contracts is:
£345/MWh for Electricity
£91/MWh for Gas
The Government has yet to announce the daily wholesale prices that will be used in determining the support for fixed price contracts.
We are still awaiting further details regarding the scheme and expect another announcement from the government on 8th October however this has not been confirmed.
In the meantime, please rest assured that we are monitoring the situation closely and aim to ensure our customers receive the maximum support available.
23 September 2022
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.
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 email@example.com.