Change on a page: The Energy Bill Relief Scheme

On 2nd September 2022, the Department for Business, Energy & Industrial Strategy (BEIS) announced the Energy Bill Relief Scheme (EBRS) to support businesses and other non-domestic customers through this winter.

There has been a lot of information for suppliers and consumers to get their head around, and we are still awaiting detail from the government to understand what this will mean for individual customers, but this is our quick take on what the scheme looks like so far.

Please note, this in a snapshot of guidance to date, which may change over time as the scheme evolves and more details are released.

What is the Energy Bill Relief Scheme?

This scheme will provide energy bill relief for non-domestic customers in Great Britain whose current energy prices have been significantly inflated in light of global wholesale energy prices.

As it stands, government derived discounts will be applied to non-domestic energy usage between 1 October 2022 and 31 March 2023 – the ‘Support Period’.

The government has committed to reviewing the scheme in the first three months, with a view to consider a possible extension or better targeted support for certain industries if deemed necessary.

Who will be eligible for support?

The scheme will be available to the majority of non-domestic consumers, including businesses, voluntary sector organisations and public sector organisations, given that they will be supplied during the ‘Support Period’ under one of the following arrangements:

• A fixed price contract agreed on or after 1^st April 2022
• A deemed contract consumer
• An out of contract consumer
• Flex contracts – the scheme is still being designed for this category

If you are supplied under a contract agreed before 1^st April 2022 for the entirety of the ‘Support Period’, you will not be eligible for any support.

How will the scheme work?

From 1^st October the government will require suppliers to accommodate a government derived p/kWh unit rate discount at the point of billing for all eligible customers.

For existing Fixed Price contracts

• The government will derive an applicable p/kWh unit rate discount dependent on the date on which the contract was signed
• The applicable p/kWh discount will be fixed for the entire Support Period
• Suppliers expect to receive information regarding applicable discount rates on or around the 30^th September

For new Fixed Price contracts

• New contract agreed and commencing in the Support Period will be sold at the prevailing market rate
• The government will then retrospectively derive a p/kWh unit rate discount applicable to all contracts signed on the given date
• The applicable p/kWh discount will be fixed for the remainder of the Support Period

Note: At the time of agreeing, the contract suppliers will have no way of determining the unit rate discount, which will be applicable at the point of billing, as this is reliant on a government calculation carried out after the fact.

Note: All contracts agreed on a given date will be eligible for the same p/kWh unit rate discount, independent of the supplier with which the customer has chosen to contract with.

For Deemed/Out of Contract consumers

• A government derived p/kWh unit price discount will be published at regular intervals to be applied to the previous period’s consumption
• The applicable discount may vary between periods, but will be subject to a ‘Maximum Discount’ level
• It is currently thought that the ‘Maximum Discount’ will be set at 11.5p/kWh, but this is subject to confirmation on or around 30th September 2022

Note: All consumption in a given period will be eligible for the same p/kWh unit rate discount, independent of the supplier with which the customers happen to be under a Deemed/OOC arrangement with.

How will the government calculate the applicable discount?

The government will calculate the applicable p/kWh discount to be applied to all fixed contracts agreed on a given date, or all consumption in a given period in the case of deemed and OOC consumers, using the flowing calculation:

Note: The government’s estimate of wholesale gas costs will vary depending on the date any fixed contract was signed, or the period of OOC/Deemed consumption concerned.

Note: The ‘Government Supported Wholesale Price’ has been provisionally set at 7.5p/kWh ; subject to final confirmation on or around 30th September 2022.

Note: The government derived discount will also accommodate a discount on green levies, however you will continue to see green levies charged on your invoices.

Where can I find out more about the scheme?

The government has provided some extended guidance around the EBRS, including several worked examples. This official guidance can be found here.