The government’s Energy Bill Relief Scheme went live on 1 October 2022 and is designed to give you a discount on your energy bills. Here’s how it all works.
What is the Energy Bill Relief Scheme?
The purpose of this scheme is to reduce energy bills for businesses, as prices soar and costs increase.
It works by applying a discount to all business energy bills and is calculated using the wholesale prices of energy. The discount is then applied to your bills in as a price per kilowatt hour (kWh), which is deducted by energy suppliers. The government then reimburses the energy suppliers for the lost revenue.
The scheme covers energy usage from 1 October 2022 to 31 March 2023 and applies to all non-domestic energy users: businesses, charities and public sector organisations in England, Wales and Scotland. Northern Ireland has its own version of the scheme.
Do I need to do anything to get the discount?
The good news is that you don’t need to do anything. The scheme is overseen by energy suppliers who will automatically include the discount on your bills.
How much will I save on my bills?
Unfortunately, working out the specific discount you’ll get is quite difficult.
This discount is calculated based on the ‘Government Supported Price’, which is £211 per megawatt-hour (MWh) for electricity and £75 per MWh for gas. But businesses don’t pay this price – this is the wholesale price rather than the retail price.
It will also make a difference if you’re on a fixed or variable energy supply contract.
What is the ‘Maximum Discount’ for the Energy Bill Relief Scheme?
If you’re using a variable, deemed or another kind of energy contract, a Maximum Discount applies.
This maximum is 34.5p/kWh for electricity and 9.1p/kWh for gas. Effectively, by setting a Maximum Discount the government is protecting itself from the price of energy exceeding its estimates.
Are there any reasons why my business wouldn’t get Energy Bill Relief?
Most businesses will qualify, but the Energy Bill Relief Scheme might not apply to your business in certain circumstance, such as:
- You’re on a fixed rate contract that was set up before 1 April 2022.
- The wholesale cost of each unit of gas or electricity is already lower than the Government Supported Price.
- You’re on a domestic energy contract i.e., you work from home.
What happens if I take out a new energy supply contract?
The discount will be automatically applied by your new energy supplier. Generally, it is a good idea to seek out a fixed contract as the Maximum Discount doesn’t apply to these.
What if I am still struggling with my energy costs?
Our energy bills are much higher than they were this time in 2021, and many small businesses are finding the costs challenging.
The first step is of course to look at energy saving measures within your business – switching things off when the business is closed, making sure you’re on the best value contract etc.
If you’re struggling to pay bills, speak to your energy supplier. Many of them are taking a more sympathetic approach than we are used to. You may be able to arrange a longer term repayment plan to get on top of the cost.
Will the relief scheme continue past March 2023?
A review of the scheme will take place in December/January and the government will make a decision on future support. The review will specifically look at how the most vulnerable non-domestic customers can be supported.
As Lune Valley accountants we can help you explore your business costs and how you can better manage your cashflow. Contact us today