Energy Bill Relief Scheme for business customers
Business savings and support experts Place Support Partnership (external link) delivered our Cost Savings Programme earlier this year and have outlined the key points of the Energy Bill Relief Scheme below:
- the government is to limit the wholesale costs for gas and electricity used for business energy customers.
- the Energy Bill Relief Scheme will cap the wholesale costs that energy suppliers can incorporate into the rates for businesses but will not determine the final rate paid by business customers.
- providing government support for households is relatively straightforward because there is an existing retail price cap. The details of the business scheme were delayed because of challenges in devising it and the complexity of corporate tariffs. However, this move also allows for a degree of competition to remain in the market.
What this means for business energy rates
- Energy suppliers will be allowed to incorporate a capped wholesale price of 21.1p/kWh for electricity and 7.5p/kWh for gas
- It only applies to all energy contracts signed with suppliers since 1 April
- It only applies to energy usage from 1 October 2022 to 31 March 2023
- After these 6 months, ministers will focus support on “vulnerable non-domestic customers". These are likely to be those customers who are least able to adjust, for example by reducing energy usage or increasing energy efficiency.
If you are out of contract now
If you are out of contract, then the government has advised to set up a contract now and you will automatically have the appropriate reductions to your energy price for the duration of the scheme applied.
With the scheme, those on out of contract rates will only 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 40.5p/kWh for electricity and 11.5p/kWh for gas, subject to wholesale market developments.
If you’re about to sign a new fixed-price contract
You should still sign a fixed-term contract now as the relevant price reduction will be automatically applied to your bill by your supplier. If you are sitting on the out of contract rates, you will still get support from the scheme but will likely be paying more than if you are in a contract.
If you are up for renewal after the scheme
Energy rates for businesses are not forecast to see much relief in price until summer 2025. If you are up for renewal after the scheme ends, then you should get in touch with Place Support Partnership (external link), who can assess the market and recommend the best time for forward purchasing your next energy contract.
If you signed before 1 April
If you signed before 1 April, you will have missed the cut off and not be eligible for the support scheme. This is because you would not have been exposed to the recent rises in wholesale prices, so you will not be eligible for support under the scheme.
Discount automatically applied
The discount will automatically be applied by the suppliers from November onwards. You will not need to do anything or contact your supplier to have this applied if you are eligible.
Illustrative example
This is an illustrative example based on recent averages of forward wholesale prices and may differ from those experienced in practice. You can see other examples on the government website (external link).
A pub uses 4 MWh of electricity and 16 MWh of gas a month. They signed a fixed contract in August 2022, giving them a current monthly energy bill of about £7,000. At the time they signed their contact, wholesale prices for the next 6 months were expected to be higher than the government supported price of £211/MWh for electricity, and £75/MWh for gas, meaning they can receive support under this scheme.
The difference between expected wholesale prices when they signed their contract and the government supported price is worth £380/MWh for electricity and £100/MWH for gas, meaning they receive a discount of £3,100 per month, reducing their bill by over 40%.
Tell us what you think about this page
Problem with a service?
If you have a service problem or complaint you need help with then please visit our contact pages.
Help us improve this page
If you want to make comments specifically about this page, then please click the button below.
Haringey, Here to Help
See what help and support is available for residents
Haringey People Extra
e-newsletter