On 21 September 2022, further details of the Energy Bill Relief Scheme (EBRS) were published in response to rapidly rising energy prices for businesses.
Lasting 6 months, the EBRS came alongside the announcement of a new Energy Price Guarantee for households on 8 September 2022. Under these new plans, the Energy Price Guarantee limits the price suppliers can charge customers for units of gas for the next two years from 1 October.
What was announced in the Energy Bill Relief Scheme?
Utilising a similar mechanism to the Energy Price Guarantee, the government will provide a discount on business gas and electricity prices.
Suppliers will apply reductions to the bills of eligible non-domestic customers. Discounts will be applied to energy usage between 1 October 2022 and 31 March 2023 with a government-supported price set at £211 per MWh for electricity and £75 per MWh for gas. This is compared to forecast wholesale prices of £600 per MWh for electricity and £180 MWh for gas. Further details of how the scheme works can be found on the government website.
The scheme will be available to everyone on a non-domestic contract including:
- Businesses
- Voluntary sector organisations, such as charities
- Public sector organisations such as schools, hospitals and care homes
who are:
- On existing fixed price contracts that were agreed on or after 1 December 2021 (amended from the previous 1 April 2022 deadline)
- Signing new fixed-price contracts
- On deemed/out-of-contract or variable tariffs
- On flexible purchase or similar contracts.
A similar scheme has been established in Northern Ireland, providing a comparable level of support. For more information, see the government website.
What do businesses need to do?
You do not need to apply to the scheme. The scheme is automatic, so if you are eligible, there is nothing you need to do.
Suppliers will automatically apply reductions to the bills of all eligible non-domestic customers. The government will then compensate suppliers for the reduction in wholesale prices. This support will be the same across suppliers, but individual bills will continue to vary across different contracts and tariffs.
What happens after six months?
The government will be undertaking a review into the operation of the scheme in 3 months’ time, to inform decisions on future support after March 2023. The review will determine those who are eligible for further support.
To inform the review, the government will be looking to answer:
- 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, taking into account the latest price position and forward curves, alongside other cost pressures
- How to continue supporting these customers – either by extending the existing scheme for some users, or replacing it with a different scheme.
For those that are identified as eligible, the support will continue without a gap between the current 6-month provision and further support.
What about those businesses that are not eligible for further support?
The government noted that those unlikely to be considered for further support, particularly large businesses that are not energy intensive, should use the initial 6-months to implement measures to protect against high energy prices.
This should include measures to increase energy efficiency and reduce waste. Ambitious energy efficiency programmes are needed to provide a long-term solution. Our toolkit and resources as part of our managing the increasing cost of doing business campaign offers insights into how to take steps to manage rising energy costs.
How to get involved
- CBI rising energy costs events and support
Watch the CBI@10 recording on, “What your business needs to know about the new energy package”, in our toolkit: Managing Rising Energy Costs
- Tell us how the scheme is impacting your business
Through gathering your insight, we will share how the scheme is working in practice and raise any concerns, or feedback on what is working well.
This can be done through the insights mailbox ([email protected]) or via your account manager.
- Inform the 3-month review of the support package
At CBI, to answer the government’s questions as part of the 3-month review of the scheme, we will provide evidence of the impact of the support package for businesses across the economy. This will be formed of insight from our members and economic analysis. We will be setting out how members can get input in due course, in the interim please continue to send insights via your account manager.
- Join the call for a long-term solution to soaring energy costs
The scheme is a welcome response that provides otherwise viable businesses with a substantial short-term fix to soaring energy prices.
However, we also need to see long-term solutions that focus on providing energy security and double down on the importance of incentivising energy efficiency to lower demand. Get involved in our policy development work on the future of the UK energy system.