Energy Bill Relief Scheme – Support for Businesses

Earlier this month Prime Minister Liz Truss announced that the Government will be offering support to businesses who are facing soaring energy prices with the Energy Bill Relief Scheme.

The new Energy Bill Relief Scheme will give businesses financial support with their energy bills for six months from 1 October 2022 until 31 March 2023. This includes all UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals, whose current gas and electricity prices have been significantly inflated in light of global energy prices. The plan aims to support growth, prevent unnecessary insolvencies and protect jobs.

The scheme will provide a discount on wholesale gas and electricity unit prices for those on non-domestic contracts, including:

• businesses
• voluntary sector organisations like charities
• public sector organisations like schools, hospitals, and care homes

Your business should be:

• on a fixed price contract, agreed on or after 1 April 2022
• signing a new fixed price contract
• on deemed/out of contract or variable tariffs
• on flexible purchase or similar contracts

If none of these apply to your business, you may not be eligible.

What discount is available under the Energy Bill Relief Scheme?

The discount is calculated based on wholesale costs of energy this winter versus a government-backed price.

This government-supported price is:

• £211 per megawatt hour (MWh) for electricity
• £75 per MWh for gas

The government says that energy costs this winter are expected to be £600 per MWh for electricity and £180 per MWh for gas.

As an example, the discount based on those costs and the government-supported price would be worth £389 per MWh for electricity and £105 per MWh for gas.

Suppliers will apply the discount on energy bills in pence per kilowatt hour (p/kWh).

How does the Energy Bill Relief Scheme work?

The government gives an example of a pub that uses 4 MWh of electricity and 16 MWh of gas a month.

They signed a new fixed price contract in August 2022 with monthly energy costs at £7,000.

Wholesale prices were higher than the government-supported price, so the pub will get a discount from 1 October 2022.

The difference between wholesale prices and the government-backed price is worth £380/MWh for electricity and £100/MWh for gas. This means the pub gets a discount of around £3,100 per month, reducing their bill by over 40%.

For variable, deemed and all other contracts, the discount is still based on the difference between the government-supported price and the wholesale price – but there will be a ‘maximum discount’ applied.

How do I get the energy discount?

The discounts will be applied automatically to your bills and you don’t need to do anything.

You should start seeing the discount from November 2022, as this is when you will be billed for energy used in October.

As mentioned above, those on contracts that aren’t fixed will be subject to a maximum discount. It should be around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market developments.

What happens after March 2023?

The government will review the scheme in three months, which will inform decisions on its future.

As previously announced, the review will focus on whether support should be more targeted. For example, has the scheme adequately supported the most vulnerable businesses?

The review will consider whether an extension to this scheme will help those customers best, or whether it should be replaced with a new scheme.

Get more guidance on the scheme at gov.uk.