Energy Bill Relief Scheme: Who is eligible for the energy price plan, what is the discount on gas and electricity, how does the scheme work and do you have to apply?

This scheme will provide energy bill relief for non-domestic customers in Great Britain amid the cost of living crisis.

Discounts will apply to energy usage initially between October 1, 2022 and March 31, 2023.

A similar scheme is underway for Northern Ireland, providing a parallel level of financial support.

Who is eligible for the government’s Energy Bill Relief Scheme?

The government’s energy price plan will be offered to everyone on a non-domestic contract including businesses, voluntary sectors such as charities and public sectors such as schools, hospitals and care homes.

These groups of customers will need to be on existing fixed price contracts that were agreed upon on or after April 1, 2022, signing new fixed contracts, on deemed/out of contract, variable tariffs or on flexible purchase or similar contracts.

The scheme is aimed at a wide range of customers but there may be some exclusions like businesses that use gas or electricity for the purpose of generating power they are selling, such as power stations, pumped hydro or grid-level battery storage.

Non-domestic suppliers and customers must not profit from the scheme other than for its intended purpose of providing mitigation on necessary energy bills. If customers engage in such activity, the discount will be revoked by the government and such customers may be liable to further penalties.

What is the energy price discount on gas and electricity?

For all non-domestic energy users in Great Britain, this government supported price will be set at £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas.

The current wholesale costs in England, Scotland and Wales for this winter is predicted to be an estimate of £600 per MWh for electricity and £180 per MWh for gas.

To make sure it’s consistent between the domestic and non-domestic schemes, the government supported price is based on the implied wholesale element of the Energy Price Guarantee for domestic customers. So it will not be the same as the final per unit price paid by non-domestic customers; this will also impact other costs like the network charges and operating costs as well as the impact of competition between suppliers.

How does the Energy Bill Relief Scheme work? Do I have to apply for it?

It will be down to suppliers to apply reductions to the bills of all eligible non-domestic customers.

Customers do not have to do anything.

The government will compensate suppliers for the reduction in wholesale gas and electricity unit prices that they are passing onto non-domestic customers.

The discount applied will be in pence per kilowatt hour (p/kWh) and the p/kWh government support scheme for comparable contracts will be the same across suppliers, but the absolute level of individual bills will vary across different contracts and tariffs.

For those on a fixed contract, the discount will reflect the difference between the government supported price and the relevant wholesale price for the day the contract was agreed. The government has been publishing the wholesale prices it will use for calculating this every day since April 1, 2022.

For variable, deemed and all other contracts, the discount will also reflect the difference between the government supported price and relevant wholesale price, but this will be subject to a ‘maximum discount’ when the scheme is applied on October 1.

Businesses on variable/flexible contracts will need to choose if they move to fixed contracts and this is likely to suit you if you don’t want to be exposed to price variation.

Third party intermediaries (TPIs)/energy brokers have no influence over the per unit discount that will be applied to energy costs under the scheme.

When will the Energy Bill Relief Scheme be reviewed by the government?

The government will publish a review of the scheme in three months’ time to evaluate the most vulnerable non-domestic customers and how the government will continue on supporting them with energy costs.

The most vulnerable are likely to be those who are least able to adapt, for example by reducing energy usage or increasing energy efficiency.

The review will consider:

- How impactful the scheme has been in giving support to vulnerable non-domestic customers.

- Which groups of non-domestic customers (by sector, size or geography) remain especially vulnerable to energy price increases, also considering the latest price position and forward curves, alongside other price pressures.

- How to continue to support these customers, either by extending the existing discount for some customers or by replacing it with a different scheme.