The Energy Bill Relief Scheme
Earlier this autumn, former Prime Minister Liz Truss announced that businesses would receive the same Energy Price Guarantee that has been introduced to cap household energy bills at £2,500 until April 2023.
This cap was originally meant to stay in place for the next two years, however from April it will now raise to £3,000 until the end of March 2024, as confirmed by the Chancellor on Thursday 17th November.
This supersedes Ofgem’s price cap, which was planned to move from £1,971 to £3,549, and will sit at £4,279 from January 2023.
However, it seems this price cap for businesses has now been revoked and instead there will be an Energy Bill Relief Scheme instead. The scheme will give financial support to business owners to help with their energy bills for 6 months, but it will not include a cap on prices.
Instead of a cap, the government will limit the wholesale price suppliers pay to generators for energy. These savings will then be passed on to consumers through a cut in the wholesale cost part of the unit rate.
The scheme has been extended to cover all fixed business contracts signed on or before December 1st 2021.
This means that for six months business owners will pay no more than £211 per megawatt hour (MWh) of electricity, and no more than £75 per MWh for gas – or, 21.1p per kWh of electricity and 7.5p per kWh of gas.
The discount you receive for fixed-rate contracts will be the difference between the baseline wholesale price, and the rate you agreed when signing your energy contract. You can find out how much your energy discount will be here.
If you’re on out-of-contract, deemed or any other variable rate, your discount will be the difference between the government baseline wholesale price and the relevant wholesale price charged by your supplier. This discount will have a maximum limit of 34.5p per kWh for electricity and 9.1p per kWh for gas.
With the scheme only extending for six months (to April 2023), the government has stated they will “provide further support to vulnerable sectors, such as hospitality, including our local pubs”.
Any green levies will also be removed from your rates, but the VAT on your energy bill will stay the same.
You can find further details regarding the scheme, including a breakdown of example discount costs here.
We will continue to update you as more details regarding support are made available.
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