How will the Government’s Energy Bill Relief Scheme (EBRS) help your Business in the coming months?

Following the announcement made by the UK Government’s Department for Business Energy & Industrial Strategy (BEIS) regarding their Energy Bill Relief Scheme (EBRS), CostAdvice have detailed below our views for your reference.

How it works*

The scheme will initially run from 1st October 2022 to 31st March 2023, with a review in 3 months’ time to provide further information on support after this period.  Current indications suggest Energy Intensive and Hospitality Businesses will receive extended support, however we are awaiting confirmation from the Government.

Discount, not a cap:

The government has set a ‘supported price’ for gas and electricity at:
£211 per megawatt hour (MWh) for electricity (21.1p/kWh equivalent),
£75 per megawatt hour for gas (7.5p/kWh equivalent).

Existing fixed price contracts:

Only contracts signed on or after 1st December 2021 are eligible for the discount. The guidance states that “If you signed your contract before 1st December 2021…you will not be eligible for support under the scheme.”

If you signed your fixed price contract on or after 1st December 2021, the government discount will reflect the difference between the supported price (£211/MWh for electricity, £75/MWh for gas) and the closing wholesale price for the week your contract was agreed (the wholesale price the government deems was actually built into your contract).

Out of contract:

The government discount for those customers on out of contract rates is subject to a maximum discount set on the 10th October 2022 as £345/MWh for electricity and £91/MWh for gas.

As being out of contract therefore poses a significant risk if wholesale prices rise, we would urge customers to agree a new contract.

The guidance itself advises “If you are out of contract and are waiting to see the details of government support, you should set up your contract as normal.”

If you are about to sign a new fixed price contract:

For customers about to renew their contract, the discount will be automatically applied.

Flexible contracts:

Your price reduction will depend on the difference between your monthly weighted average baseload price and the government supported price.

Given the estimated maximum discounts of £345/MWh for electricity and £91/MWh for gas, we therefore understand that, as long as your hedged prices are lower than £556/MWh for electricity, or £166/MWh for gas, then you should obtain the full discount to the supported price.

If, however, your hedged volume is greater than these figures, you may only obtain the maximum discount.

How do I know if our Business is eligible for assistance

CostAdvice are here to help advise if your Business is eligible to take advantage of the Governments EBRS Scheme, with our handy, easy-to-use, form available at the below link:

https://form.jotform.com/222653101094042

Frequently Asked Questions

Do I need to do anything?

No. the discount will be applied automatically by your supplier. 

Does this mean our prices are capped at 21.1p/kWh for electricity and 7.5p/kWh for gas?

No, not necessarily. If you are out of contract, the prices you are charged may be significantly above what you could achieve by being in a contract and with the benefit of the supported price.

It is important to also note the supported price is ONLY for the wholesale element of the contract, and therefore all other charges including transmission, distribution, or other levies will be added on top.

Where can I find the official guidance issued by the Department of Business Energy & Industrial Strategy?

The guidance is available at this link https://www.gov.uk/guidance/energy-bill-relief-scheme-help-for-businesses-and-other-non-domestic-customers

I still have more questions, who can I contact?

CostAdvice understand you may have many questions as to how these benefits help your business, and as such we are here to help.  For impartial help, advice & assistance please contact Daniel Walker either on 01246 252788 or by e-mail to daniel.walker@costadvice.co.uk who will be happy to help.

*The above is Cost Advice Service Ltd’s interpretation of the guidance. You are advised to read the guidance to ensure your own understanding of the scheme.