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The Energy Bill Relief Scheme for Non-Domestic Customers

The government has announced details of the Energy Bill Relief Scheme in an effort to cut energy bills for non-domestic energy customers which will come as a relief for many businesses facing exorbitant energy prices.

The Energy Bill Relief Scheme scheme will initially run for 6 months, and discounts will be applied to energy usage initially between 1st October 2022 and 31st March 2023.

Unfortunately the scheme is only scheduled for 6 months, so there remains significant uncertainty about what will happen from April 2023 and which businesses will be deemed ‘vulnerable’ and so continue to receive support.

The scheme will be available to everyone on a non-domestic contract including businesses, voluntary sector organisations (such as charities), and public sector organisations (such as schools, hospitals and care homes).

The scheme will apply to non-domestic energy customers who are:

> On existing fixed price contracts that were agreed on or after 1 April 2022
> Signing new fixed price contracts
> On deemed / out of contract or variable tariffs
> On flexible purchase or similar contracts

Businesses do not need to take action or apply to the scheme.

The support will be automatically applied to all eligible bills. The savings for energy used in October will be seen in your October bills, which would usually be received in November.

For non-domestic energy customers, the government will provide a discount on your gas and electricity unit prices.

For all non-domestic energy users in Great Britain the government supported price has been set at:

> £211 per megawatt hour (MWh) for electricity
> £75 per MWh for gas

For comparison, wholesale costs in England, Scotland and Wales for this winter are currently expected to be around:

> £600 per MWh for electricity
> £180 per MWh for gas

If you’re on a fixed price contract/tariff which was agreed on or after 1 April 2022, you will get support if the calculated wholesale element of the price you are paying is above the government supported price. If your fixed tariff is based on wholesale prices below the government supported price, then you will not be eligible for support.

Your per unit energy costs will automatically be reduced by the relevant pence per Kilowatt Hour (p/kWh) for the duration of the scheme.

If you’re about to sign a new fixed price contract, then the relevant price reduction will be automatically applied to your bill by your supplier.

If you signed your fixed contract before 1st April 2022, then the government expects that you will not have been exposed to the recent rises in wholesale prices, so you are not eligible for support under the scheme.

If you get your energy through a landlord, heat network, or energy service company then the government expects businesses and other organisations to pass on the benefits under this scheme through to the end user in a reasonable and proportionate way.

The government will publish a review into the operation of the scheme in 3 months’ time, to inform decisions on future support after March 2023.

The review will focus on identifying the most vulnerable non-domestic customers and how the government will continue assisting them with energy costs. The review will consider:

> How effective the scheme has been in giving support to vulnerable non-domestic customers

> Which groups of non-domestic customers (by sector, size or geography) remain particularly vulnerable to energy price rises

> How to continue supporting these vulnerable customers – either by extending the existing scheme for some users, or replacing it with a different scheme.

Those businesses deemed vulnerable will continue to receive support after the 6 month scheme has elapsed.

Users who are “less vulnerable to energy price increases” are encouraged by the government to use the 6 months’ support provided by the scheme to identify measures they can take to protect themselves against high energy prices.

Full details about the Energy Bill Relief Scheme and real-world examples of the relief available can be found on the government website: https://www.gov.uk/guidance/energy-bill-relief-scheme-help-for-businesses-and-other-non-domestic-customers

If you have any questions please call us on: 0161 249 5040 or email: partners@leonherman.co.uk

Disclaimer

This material is published for information only. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. No responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by Leonherman.

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