Energy Bill Relief Scheme for Business

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.

What does this mean for your 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 will apply to energy usage from 1 October 2022 to 31 March 2023

For comparison, wholesale costs for this winter are currently expected at around 60p/kWh for electricity and 18p/kWh for gas.

Wholesale charges are only part of what make up the final costs on an energy bill. The capped wholesale prices will not be the final rates that businesses pay.

The Energy Bill Relief Scheme only applies to contracts signed after 1^st April 2022 and only applies for six months after which point support will be made for vulnerable sectors (this has yet to be clarified).

What 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.

What 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.

 What if you are up for renewal after the scheme?

Energy rates for businesses are not forecast to seeing much relief in price until summer 2025. If you are up for renewal after the scheme ends, then you should get in touch, and we can assess the market and recommend the best time to forward-purchase your next energy contract.

What if you signed before 1^st April?

If you signed before the 1^{st of} 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.

Will I have to apply for the discount?

No, 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.