The UK government has set out decisive action to support businesses with their energy bills. So, here at Priva UK & Ireland team has delved through the detail to give you the key points on the new ‘Energy Bill Relief Scheme’ which was announced by Secretary of State for Business, Energy and Industrial Strategy Jacob Rees-Mogg. This package of measures has been launched with the aim of easing the financial burden of rising energy bills for non-domestic energy customers.
Here’s everything you need to know…
Who is eligible for help?
The Energy Bill Relief scheme will provide support to non-domestic energy in Great Britain, including businesses, voluntary sector organisations and charities as well as public sector organisations such as schools, hospitals, and care homes.
To be eligible for support, non-domestic customers must be
- on an existing fixed price contracts that was agreed on or after 1 April 2022
- signing new fixed price contracts
- on deemed / out of contract or variable tariffs
- on flexible purchase or similar contracts
There are a limited number of exclusions to the scheme. For example, businesses that use gas or electricity for the purpose of generating power they are selling back into the grid, such as power stations, pumped hydro or grid-level battery storage are not eligible
The government has been very clear that non-domestic suppliers and consumers must not profit from the scheme other than for its intended purpose of providing relief on necessary energy bills. Any such activity will result in support being refundable to government and may be liable to further penalties.
How much will this reduce my energy bills?
The government will provide a discount on your gas and electricity unit prices, with the discount applied in pence per kilowatt hour (p/kWh).
To calculate your discount, the estimated wholesale portion of the unit price businesses would be paying will be compared to a baseline ‘government supported price’ which is lower than currently expected wholesale prices this winter.
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
The level of discount applied to individual bills will 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.
- 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’ that will determined at the beginning of the scheme.
In real terms, it is anticipated that the Energy Bill relief Scheme could more than halve the projected costs of electricity and gas.
How will the reduction be applied?
The support will be automatically applied to all eligible bills. Organisations do not need to apply for the scheme. The savings for energy used in October will be seen in your October bills, which would usually be received in November.
How long will the scheme last?
Discounts will apply to energy usage initially between October 1 2022 and March 31, 2023.
What happens after March 31 2023?
The government will publish a review of the scheme in 3 months’ time which will inform decisions on any future support once the initial six months support comes to an end.
The review will focus on identifying the most vulnerable non-domestic customers and how the government will continue assisting them with energy costs. These are likely to be those who are least able to adjust, for example by reducing energy usage or increasing energy efficiency. It will also seek to get an understanding of the effectiveness of the scheme in giving support to vulnerable non-domestic customers, which groups of non-domestic customers (by sector, size, or geography) remain particularly and how the government can continue supporting these customers.
What can my business do?
With the government set to slim down the relief offered in six months, for the majority of non-energy intensive businesses, the next six months should be used to identify measures that can be taken to protect themselves against future energy prices. It is an opportunity to look at how energy demand can be reduced and what energy efficiency measures can be introduced. Is there a PRIVA call to action needed here?
Is there any other support available for businesses?
There is a range of other ongoing schemes in place to support businesses with their energy costs. These include:
- The Industrial Energy Transformation Fund (IETF), which consists of £315 million live grant funding that supports manufacturers with high energy use to cut their energy bills and carbon emissions by investing in energy efficiency and low-carbon technologies.
- The UK Business Climate Hub which provides practical steps on cutting emissions and saving money. Businesses based in England may also be able to access support via local Growth Hubs.
If your organisation is concerned about energy tariff increases and looking for new ways to decarbonise your buildings and estate, our team (and our network of approved Priva Partners) is here to help.