How the Energy Bill Relief Scheme affects businesses

We know it has been a difficult time for our business customers and many need support as they face ongoing increasing costs. Following the announcement of the Energy Bill Relief Scheme, we welcome the further guidance provided by Government on how its energy support will work for businesses and public sector organisations and have summarised our current understanding below. 

Yesterday, the Department for Business, Energy and Industrial Strategy (BEIS) provided confirmation that businesses will receive support this winter through a p/KWh discount on their business energy bills and we’re ready to make sure the price discount is implemented as quickly as possible.

 

Who's eligible for the Energy Bill Relief Scheme?

The scheme will be available for all businesses and public sector organisations and will see the wholesale energy element of a customer’s bill capped at £211/MWh for electricity and £75/MWh for gas (referred to as the government supported price). This price is the cap for wholesale energy costs and does not mean, for example, that unit rates will be set at 21p/KWh. It is also worth noting that the supported price includes the green levies discount, this will not be discounted in addition.

 

How does the Energy Bill Relief Scheme work?

This scheme will apply for consumption between 1 October 2022 and 31 March 2023.  The support will apply to any fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible contracts. Businesses do not need to take any action to receive the discount, in all cases the relevant price reduction will be automatically applied to your bill.

The discount will be calculated differently depending on which type of contract you are on:

 

  • 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 discount we will use on your bill for the whole winter period. This discount will vary by the date the contract was agreed but for any given date all suppliers will use the same discount. This discount is applicable for anyone who has agreed a contract for consumption over this winter since the 1 April 2022.
  • For flexible contracts the level of reduction offered will depend on the difference between your weighted achieved price for any month over this winter and the government supported price. This will be subject to a maximum level of support (the Maximum Discount).
  • For default, deemed or variable contracts, the discount will be set by BEIS for all suppliers to reflect the difference between the government supported price and a relevant wholesale price, but will also be subject to the Maximum Discount. This initial view will be confirmed for the start of the scheme on 30 September 2022. Any customers on these types of tariffs will still be subject to wholesale market volatility above the Maximum Discount. 

 

What if I'm not on a fixed tariff?

So, those not on a fixed contract will pay reduced bills, but these may still change as the market moves and could be subject to price increase. For price certainty your business may want to consider a fixed price contract.

For those businesses about to agree a new fixed price contract, you should continue as usual and the relevant price reduction will be applied to your bill. This reduction will be confirmed by BEIS in the days after contracts are agreed but ahead of billing. 

A review of the scheme will take place in three months to inform a decision on any support beyond 31 March 2023 for the most vulnerable industries.

Further information about the scheme has now been published on the Government website and is available here.

The support scheme is a positive step, providing customers with some much-needed reassurance over winter. As well as ensuring the price discount is implemented as efficiently as possible for our customers, EDF will remain committed to providing expert support and tools to help navigate this uncertain market.

We will continue to work closely with BEIS and keep our customers updated with further information as soon as this is available.

 

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Posted by Katherine Moriame

Katherine has worked in the energy industry for 12 years, with roles in a variety of disciplines across wholesale market services, finance and now in EDF Business Solutions. As Head of Commercial, Katherine has a detailed understanding of the energy market and EDF’s offering to business customers.

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