On the morning of 21st September 2022, The Department for Business, Energy and Industrial Strategy (BEIS) has provided further information on how the Government Energy Bill Relief Scheme will support UK businesses over the upcoming winter period. Our understanding of this is outlined below:
A wholesale energy cap for businesses (known as the “Supported Price”) will be introduced limiting the maximum costs to about 21.1ppkWh for electricity and 7.5ppkWh for gas – less than half the wholesale price anticipated for this winter. Supplier charges can be added to the new rates, allowing for competition in the market and more variation in the final delivered unit rate than the household Energy Price Guarantee provided. We are seeking advice from suppliers to seek clarity on their approach to these non-commodity charges and how they will impact the end users.
The package will apply to non-domestic users like businesses, charities and public sector organisations, with a three-month review and potential further relief granted to “vulnerable businesses/sectors”.
The planned discounts are set to apply to fixed contracts signed since 1st April 2022 (as well as to deemed, variable and flexible tariffs and contracts) and will last for six months starting 1st October 2022. The savings will be first seen in October bills, 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.
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. This maximum discount is likely to be around 40.5ppkWh for electricity and 11.5ppkWh 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 can switch to a fixed contract/tariff for the scheme’s duration if they wish, underpinned by the Government’s Energy Bill Relief Scheme support.
Further advice is being sought on several points following the announcement and we will release further communication in due course.