Energy Bill Relief Scheme kicks in to support businesses from rising costs

It is expected to lead to businesses paying wholesale energy costs ‘well below half of expected prices’ for this winter

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A support measure aimed at protecting British businesses, charities and public sector organisations from rising energy prices has now kicked in.

The government’s Energy Bill Relief Scheme – equivalent to the Energy Price Guarantee put in place for households – similarly discounts price per unit of gas and electricity, which is expected to lead to businesses paying wholesale energy costs “well below half of expected prices” for this winter.

It will provide energy bill relief for non-domestic customers, including businesses, voluntary sector organisations such as charities and public sector organisations such as schools, hospitals and care homes, in Britain for six months until 31st March 2023.

It will be available to everyone who are on existing fixed price contracts that were agreed on or after 1st April 2022, signing new fixed price contracts, on deemed/out of contract or variable tariffs and on flexible purchase or similar contracts.

The scheme is intended to be of broad application but there may be very limited exclusions, for example businesses that use gas or electricity for the purpose of generating power they are selling back into the grid, such as power stations, pumped hydro or grid-level battery storage.

The estimated wholesale portion of the unit price businesses would be paying this winter will be compared to a baseline ‘government supported price’ which is lower than currently expected wholesale prices this winter.

For all non-domestic energy users in Britain, this government supported price has been set at £211/MWh for electricity and £75/MWh for gas.

Wholesale costs in England, Scotland and Wales for this winter are currently expected to be around £600/MWh for electricity and £180/MWh for gas.

For variable, deemed and all other contracts, the maximum discount has been set at £345/MWh for electricity and £91/MWh for gas.

Business and Energy Secretary Jacob Rees-Mogg said: “While Putin’s weaponisation of energy has driven energy prices to record highs, we will not let his regime harm this country’s businesses and households.

“Unprecedented government support is beginning this weekend, protecting families and businesses across the country from what was going to be an 80% increase in energy bills this winter.”

The Energy Price Guarantee, which limits the amount suppliers can charge for each unit of gas and electricity used by a household in the UK as well as the standing charge, has also kicked in for households.