The context:

It's been a nerve-wrecking and confusing time for many in our sector, as unprecedented supply-side disruption has seen energy bills subject to historic inflation. The government has announced a new scheme to help businesses, charities and public sector organisations, and we're here to break down what it means for your bills.

The headlines:

The government, through its Energy Bill Relief Scheme, will provide a discount on wholesale gas and electricity prices for all non-domestic customers (that's us: charities, voluntary organisations, businesses and public sector organisations). This support will be equivalent to the Energy Price Guarantee put in place for households. 

So, how does it work? Well, in short: wholesale prices (the prices your energy company pays for the energy it then sells to you) are predicted to rise steeply this winter. Naturally, this causes energy companies to charge you more. To protect organisations from this increase, the government has set a Supported Wholesale Price. This is expected to be £211 per MWh for electricity and £75 per MWh for gas - less than half the wholesale prices anticipated this winter. Suppliers will apply the discount automatically to your bills, and the government will compensate those suppliers for the reduction in wholesale prices.

The nitty-gritty:

The discount 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.

As with the Energy Price Guarantee for households, 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.

The supported price (likely to be £211 per MWh for electricity and £75 per MWh for gas) is equivalent to the wholesale element of the Energy Price Guarantee for households. It includes the removal of green levies paid by non-domestic customers who receive support under the scheme.

The level of price reduction for each business will vary depending on their contract type and circumstances:

• non-domestic customers on existing fixed price contracts will be eligible for support as long as the contract was agreed on or after 1 April 2022. Provided that the wholesale element of the price the customer is paying is above the Government Supported Price, their per unit energy costs will automatically be reduced by the relevant p/kWh for the duration of the Scheme. Customers entering new fixed price contracts after 1 October will receive support on the same basis.
   
• those on default, deemed or variable tariffs will receive a per-unit discount on energy costs, up to a maximum of the difference between the Supported Price and the average expected wholesale price over the period of the Scheme. The amount of this Maximum Discount is likely to be around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market developments. Non-domestic customers on default or variable tariffs will therefore pay reduced bills, but these will still change over time and may still be subject to price increases. This is why 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.

To view the full outline, visit: https://www.gov.uk/government/news/government-outlines-plans-to-help-cut-energy-bills-for-businesses

How we can help:

We have put together a Cost of Living resources page, which you can view here.

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