Energy Bill Relief Scheme: Care homes to receive discounted energy costs for six months
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Joe Webber
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Wholesale energy costs to be discounted under Energy Relief Scheme
On the 21st of September, the government announced the new Energy Relief Scheme aimed at lowering energy costs for businesses and other non-domestic customers. Care homes, hospitals and charities are among the services that will receive the much-needed support.
For the majority of this autumn and the entirety of the upcoming winter period (1st October 2022 to 31st March 2023), eligible businesses, voluntary sector organisations and public sector organisations stand to benefit from discounted wholesale gas and electricity prices.
Both domestic households and non-domestic consumers are feeling the squeeze of the cost of living crisis. The Energy Relief Scheme follows the recent news that domestic energy costs will be frozen for two years. However, businesses don’t benefit from the Ofgem price cap which is in place to protect residential customers. This means that without immediate intervention, businesses are at risk of enormous energy costs.
Who is eligible for the support?
To receive discounted energy rates for your businesses or non-domestic properties, you will need to be paying above the government’s ‘supported costs’ (£211 per MHw for electricity and £75 per MWh for gas) and meet the following criteria:
- You agreed to your fixed-price contract / tariff on or after 1 April 2022.
- Your contract has expired and you’re about to sign a new fixed-price contract.
- You’re on a variable tariff and want to keep it (you will get the reduction, subject to the ‘maximum discount’).
- You’re on a flexible purchase contract.
You are not eligible for support if:
- Your fixed tariff is based on wholesale prices below the government’s ‘supported costs’.
- You signed your fixed contract before 1 April 2022, as you would not have been exposed to the recent rises in wholesale prices.
- You attempt to profit from the scheme by reselling energy back to the grid (not applicable to most public and voluntary sector organisations).
How does the Energy Relief Scheme work?
From the 1st of October 2022, energy suppliers will automatically reduce the bills of all eligible non-domestic customers and the government will compensate the suppliers. This means you shouldn’t need to take any action in order to receive your discounted gas and electricity unit prices.
Because the discounts will be automatically processed, be wary of any messages asking for your bank details, as it could be a phishing scam. If you get any suspicious messages, you may wish to report them using the details on this page.
Without any support, the estimated winter costs in England, Scotland and Wales are expected to rise to:
- £600 per megawatt-hour (MWh) for electricity
- £180 per MWh for gas
But now the ‘government supported cost’ has been set for six months at:
- £211 per MWh for electricity
- £75 per MWh for gas
As per the government’s official guidance: “To calculate your discount, the estimated wholesale portion of the unit price you would be paying this winter will be compared to a baseline ‘government supported price’.”
Please note that non-domestic customers based in Northern Ireland will be placed under a different scheme than the rest of Great Britain but will receive comparable support.
How long will the energy support last?
This is a six-month scheme, running between 1st October 2022 and 31st March 2023. However, the government has announced it will continue providing ongoing support for vulnerable industries after the initial six-month period.
In three months’ time, the scheme will be reviewed to identify which non-domestic customers are most vulnerable to energy price rises. Support will continue for these customers after the initial six-month period – either by extending the scheme or replacing it with a new scheme – without any gap in help. Vulnerable customers will “likely be those who are least able to adjust, for example by reducing energy usage or increasing energy efficiency”.
Find out more
For more in-depth information about the Energy Relief Scheme, read the official guidance published by the government here: https://www.gov.uk/guidance/energy-bill-relief-scheme-help-for-businesses-and-other-non-domestic-customers
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