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Business Energy Bill Relief Scheme

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The business energy relief scheme will be welcome news to many business owners all over the UK. However, there's still some confusion as to what that means for fixed-price contracts and if companies can switch under the energy bill relief scheme. 

All business energy customers will have their bills reduced for six months, according to the UK Government's newly introduced Energy Bill Relief Scheme (EBRS). The government-supported price package caps wholesale prices at 21.1p per kWh/ £211 per megawatt-hour (MWh) and £75 MWh for gas. There will be different discounts for those paying variable rates

The universal scheme will apply to all UK businesses by subsidising wholesale energy prices - this means that the level of discount received will depend on what companies are currently paying. The price discount will reduce electricity bills by half and gas bills by a quarter. 

The business energy help scheme will run from October 1, with a review scheduled in three months’ time. The scheme is scheduled to run until March 31. 

How Does This Apply To Your Business? 

All UK businesses, including charities, schools and hospitals are eligible for the support. Similar to the way household support has been rolled out, businesses do not need to take action or apply for help. All discounts will be automatically applied to energy bills. 

What Discount Will Your Business Receive?

The amount of discount will vary depending on contract type and circumstances. This is where things get a little confusing, especially for existing fixed-price contracts. 

The Energy Bill Relief Scheme applies to all UK businesses that have agreed a contract on or after 1 April 2022. 

Qualifying businesses do not need to apply for this and the discount will be automatically applied to your energy costs. The amount of discount will vary based on the date you entered your business energy contract. 

You will receive communication from your energy supplier in due course once everything has been finalised. The discount will be applied to energy costs from October 1 right through to March 31 2023. The downside is that you will not know what discount you're receiving until you receive your business energy bills each month. 

The key takeaway is that discount is not the same amount for all businesses. 

How does the energy bill relief scheme look when applied to a business? 

Small businesses using 10,000 kWh of electricity during the relief scheme period (October to March 2023) who agreed to a fixed-rate contract in August 2022 would see energy costs of around £1,000. 

Fixed contracts at the time would have seen much higher wholesale energy costs than the Government supported price of 21.1p per kWh. 

The difference between the projected wholesale prices and the Government supported price scheme is worth 29p/kWh for electricity prices. In this example, the small business would receive a discount of around £483 per month. 

Fixed-Contracts 

The help applies to fixed business energy contracts agreed on or after April 1, 2022. If you’re paying a price above the Government Supported Price, unit gas and electricity will be reduced in line with the support package. If you switch your business energy to a new fixed-price contract after October 1, companies will receive support. 

Default, Deemed & Variable Tariffs 

Businesses on these tariffs will receive a per-unit discount on energy bills. The discount will be calculated up to the maximum of the difference between the support package price and the average expected price of the wholesale energy price for the duration of the scheme. 

Flexible Contracts 

Energy suppliers will calculate discounts for flexible contracts according to specific details outlined in the contract. These contracts are typically reserved for large-usage business energy customers and will be subject to the maximum discount. 

Can Businesses Still Switch Tariffs? 

You may be wondering what new fixed price contracts look like and if you can even switch businesses' energy suppliers under the energy bill relief scheme. 

Businesses can still switch energy suppliers. If you agree to a fixed price contract today you avoid the volatility of the markers energy prices. Electricity unit prices can still go up or down and you will still receive discount on your energy bills. 

You can compare business energy prices here to lock-in certainty. 

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