Government outlines plans to help cut energy bills for businesses

The Energy Bill Relief Scheme will offer discounts on wholesale gas and electricity prices for all UK businesses for six months from 1 October 2022. This new support package for businesses facing rising energy bills in Great Britain and Northern Ireland has been unveiled by Business Secretary Jacob Rees-Mogg.

The new Government Energy Bill Relief Scheme for businesses will:

• provide a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector and the public sector) whose current gas and electricity prices have been significantly inflated in light of global energy prices
• apply to fixed contracts agreed on or after 1 April 2022, as well as to variable and flexible tariffs and contracts. The level of price reduction for each business will vary depending on their contract type and circumstances
• apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period for all non-domestic energy users. The savings will be seen in October bills, typically received in November 
• apply to all non-domestic energy customers in England, Scotland and Wales. A parallel scheme, based on the same criteria and offering comparable support, will be established in Northern Ireland.

Business do not need to apply to the scheme as the support, in the form of a per/kWh (per kilowatt hour discount) will automatically be applied to bills.  Under the Scheme, wholesale prices are expected to be fixed for all non-domestic energy customers at £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter.  The scheme also removes green levies.

Initial media reports suggest that this could represent savings of 50% for businesses.

For those not connected to either the gas or electricity grid, equivalent support will also be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas. Further details are expected to be announced on this shortly.

Emergency legislation will be required to underpin the new scheme. The scheme will be reviewed after three months with an option to extend support for yet unidentified “vulnerable businesses”.

For full details on how the Energy Bill Relief Scheme will work, read the press release.