UK Energy Bill Relief Scheme Important Updates

UK Energy Bill Relief Scheme Important Updates

The UK government has announced some updates to the Energy Bill Relief Scheme (EBRS), including to the eligibility criteria.

The date from which fixed contracts are eligible under the scheme has been expanded from 1 April 2022 to 1 December 2021, to ensure businesses and other non-domestic consumers who have experienced recent energy price increases are supported as they navigate the challenging winter period ahead.

Read the updated guidance on the EBRS: https://hubs.ly/Q01pw2JL0

The government has also now published the Energy Bill Relief Scheme discount rates for fixed and default/variable contracts, which you can find here: https://hubs.ly/Q01pvV8x0

Eligibility

The scheme will be available to everyone on a non-domestic contract including:

• Businesses
• Voluntary sector organisations, such as charities
• Public sector organisations such as schools, hospitals and care homes

who are:

• On existing fixed price contracts that were agreed on or after 1 December 2021
• Signing new fixed price contracts
• On deemed / out of contract or variable tariffs
• On flexible purchase or similar contracts

 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
• Supporting fixed contracts signed from 1^st December 2021 (THIS IS A CHANGE)

How it works
Applying the reduction

Suppliers will apply reductions to the bills of all eligible non-domestic customers.

The government will compensate suppliers for the reduction in wholesale gas and electricity unit prices that they are passing onto 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.

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.

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’ (£345/MWh for electricity and £91/MWh for gas).

Businesses on variable / flexible contracts will need to choose if they move to fixed contracts. This is likely to suit you if you 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 of course continue to vary.

Suppliers are required to ensure that where discounts are being applied under the scheme, they are subject to a price floor set at the government supported price for gas and electricity. This means that the effective retail unit price for a customer’s gas and electricity (inclusive of wholesale, network, policy and supplier costs, but exclusive of VAT and Climate Change Levy) does not fall below the government supported price for each once their discounts have been applied. This is to ensure consistency of support and avoid unintended consequences in some circumstances, such as a customer’s retail unit prices turning negative after a discount is applied under scheme.

Third party intermediaries (TPIs) / energy brokers have no influence over the per unit cost reductions that will be applied to energy costs under the scheme. You do not have to take out a new contract or change your contract for appropriate reductions to automatically be applied to your bills.

Example 1: A pub

A pub uses 4 MWh of electricity and 16 MWh of gas a month. They signed a fixed contract in August 2022, giving them a current monthly energy bill of about £7,000. At the time they signed their contact, wholesale prices for the next 6 months were expected to be higher than the government supported price of £211/MWh for electricity, and £75/MWh for gas, meaning they can receive support under this scheme.

The difference between expected wholesale prices when they signed their contract and the government supported price is worth £380/MWh for electricity and £100/MWh for gas, meaning they receive a discount of £3,100 per month, reducing their bill by over 40%.