Business Energy Bill Relief Scheme

Update: 6th October 2022 

Business Energy Bill Relief Scheme 

The government has announced plans to help cut energy bills for businesses. 

The government has now unveiled plans for a new Energy Bill Relief Scheme, which extends the energy price cap to all UK businesses, charities, and the public sector. The price cap will come into force on 1st October - businesses are encouraged to tender for and enter into a contract as normal, and the price cap will be applied by the energy supplier.

Frequently Asked Questions:

1. Who does the scheme apply to? 
   The scheme will be available to everyone on a non-domestic contract including; businesses, voluntary sector and public sector organisations.
   
   
2. How does the price cap work?
   The price cap applies to any contract signed after the 1st April 2022 and will apply to energy usage from 1st October 2022 to 31st March 2023, running for an initial 6 month period. Savings will first appear in October bills (typically received in November).
   
   Prices are capped at:
   21.1 p/KWh for electricity
   7.5 p/KWh for gas
   
   
3. Is this the price I will now pay?
   No, it is important to understand this is only the cost of the wholesale energy element, this does not include any non-energy costs, which vary from site-to-site and supplier-to-supplier. 
   
   
4. Why should I tender my contracts? 
   Given the significant difference between supplier third party charges on fixed contracts, there is an increasing need to tender your contracts competitively (the significance is you could be paying between 31p or 65p for fully delivered contracts due to varying supplier margins and risk premiums which are not covered by the cap.
   
   
5. What if I do nothing?
   Customers that are in a contract will benefit fully from the cap, however those who choose do nothing, will fall onto default (out of contract rates) and will be set a maximum discount  *(set on 30 September 2022 at £345/MWh for electricity and £91/MWh for gas).
   
   Supplier published default rates are much higher than contract rates (circa >35%). We are currently seeing fully delivered default rates over 120 p/KWh.
   
   
6. What if I am on a Flexible Agreement?
   For businesses on flexible purchase contracts, the amount of reduction offered will depend on the difference between your monthly weighted average baseload price and the government supported price. This will be determined by your individual procurement strategy and calculated by your suppliers, according to the specifics of your contract. Again, this will be limited to the Maximum Discount (set on 30 September 2022 at £345/MWh for electricity and £91/MWh for gas).

How Can we Help?

• Negotiate best terms for third party charges.
• Advise on risk strategy and length and type of contract
• Provide our trigger technology to set your own price cap going forward
• Advise on any net zero ambitions.
• Advise on long-term PPA agreements to ensure long term price stability