The Government has announced further details of the Energy Bill Relief Scheme which will discount wholesale energy prices for businesses for six months from 1 October 2022.
The Department for Business, Energy and Industry revealed that under the scheme wholesale prices are expected to be fixed or discounted for all supplier-billed non-domestic customers. The level of discount will depend on whether there is a supply contract in place.
The estimated Government Supported Price is 21.1p/kWh for electricity and 7.5p/kWh for gas which is around a third of anticipated Winter 2022 prices of 60p/kWh (electricity) and 18p/kWh (gas). The rates will be confirmed on 30 September 2022.
Important points to note:
- The discount will only apply for contracts secured after 1 April 2022 – we are awaiting confirmation if the date refers to the contract start or signature date;
- Suppliers will apply reductions at the point of billing;
- For variable, deemed and default rates, the discount applied will be capped at approximately 40.5p/kWh (electricity) and 11.5p/kWh (Gas).
- Businesses on variable or flexible contracts will be subject to similar capped reductions but may change to fixed contracts to avoid exposure to price variations.
- The discount only applies to energy billed directly from the supplier, but the Government expects that savings will be passed on to end users.
The announcement is very much welcomed and brings clarity to those businesses which have delayed securing contracts in recent weeks. The Government advice is very clear that for supplies which are or will go out of contract from 1 October 2022 contracts should be asset up to achieve maximum benefit from the Government Supported Price.
The support package is indeed a welcome and necessary intervention which will run until 31 March 2023 to support businesses with spiralling costs. The Government will publish a review in January outlining the effectiveness of the scheme and outlining future plans for support which may be directed at the most vulnerable industries. It is therefore vital that non-domestic energy users utilise the next six months to seek all energy-saving opportunities in their buildings to minimise the future impact of rising energy costs when the scheme comes to an end.
At Carbonxgen we continue to support our clients with securing energy contracts to maximise benefits of the Government Scheme whilst supporting our clients to target areas for change to provide resilient and sustainable buildings for all end users. We will update you once clarity is further provided on or before 30 September 2022.