What is the Energy Bill Relief Scheme?

There is no price cap on business energy. The Government’s Energy Bill Relief Scheme (EBRS) will give businesses financial support with their energy bills for six months from October 1st 2022, with the Energy Bills Discount Scheme following on from April 1st 2023 for 12 months.

The Energy Bill Relief Scheme for businesses works differently than a price cap. Instead of capping rates, the government will discount the wholesale price suppliers pay for energy. The Government are publishing the wholesale energy cost on a weekly basis to aid in calculating the costs of energy with their discount applied: Energy Bill Relief Scheme: discounts for fixed, default and variable contracts

How will the Energy Bill Relief Scheme work?

Fixed electricity contract:

Here’s how the discount will work for a business on a fixed electricity contract at an agreed rate of 28p per kWh:

Fixed contract unit rate (per kWh)	28p	This is the price you pay for each kWh unit of energy you use, as stated in your contract.
Wholesale price	10.69p	This is the amount of your unit rate that’s made up of the cost of wholesale energy (this changes daily based on volatility until you accept a fixed contract).
Other costs	17.31p	This is the amount of your unit rate made up of other charges (supplier margins, distribution costs, etc.), also known as non-commodity charges.
Government baseline wholesale price (per kWh)	21.1p	This is the maximum amount suppliers can charge for wholesale energy under the energy relief scheme.
Energy Bill Relief Scheme discount	0p	This is the amount of discount you’ll get under the scheme. It’s the wholesale cost minus the baseline price.
Discounted unit rate (per kWh)	28p	This is the discounted amount you’ll pay for each unit of energy under the scheme. It’s your agreed unit rate minus your discount.

*In this example, the discounted rate is equal to the unit rate as the wholesale price is below the threshold for the EBRS discount.

Out-of-contract electricity rates:

Here’s how the discount will work for a business on an out-of-contract electricity rate of 80p per kWh.

Out-of-contract rates (per kWh)	80p	This is the price you pay for each kWh unit of energy you use
Wholesale price	55.63p	This is the amount of your unit rate that’s made up of the cost of wholesale energy (this changes daily based on volatility until you accept a fixed contract).
Other costs	24.37p	This is the amount of your unit rate made up of other charges (supplier margins, distribution costs, etc.), also known as non-commodity charges.
Government baseline wholesale price (per kWh)	21.1p	This is the maximum amount suppliers can charge for wholesale energy under the energy relief scheme.
Energy Bill Relief Scheme discount	34.53p	This is the amount of discount you’ll get under the scheme. It’s the wholesale cost minus the baseline price.
Maximum Energy Bill Relief Scheme discount*	34.5p	This is the maximum amount of discount that can be applied to out-of-contract rates.
Discounted unit rate (per kWh)	45.5p	This is the discounted amount you’ll pay for each unit of energy under the scheme. It’s your out-of-contract unit rate minus the maximum discount.

*In this example, the discounted rate would have been 45.47p (the wholesale price of 80p minus the government discount of 34.53p), but this is higher than the maximum discount that is allowed under the scheme, so a discount of 34.5p is applied.

This means that the higher your rates, the higher your bills will be, even once the discount has been applied. Out-of-contract rates are subject to market volatility, so please contact us for a full market comparison.

Fixed gas contract:

Here’s how the discount will work for a business on a fixed gas contract at an agreed rate of 7p per kWh:

Fixed contract unit rate (per kWh)	7p	This is the price you pay for each kWh unit of energy you use, as stated in your contract.
Wholesale price	3.41p	This is the amount of your unit rate that’s made up of the cost of wholesale energy (this changes daily based on volatility until you accept a fixed contract).
Other costs	3.59p	This is the amount of your unit rate made up of other charges (supplier margins, distribution costs, etc.), also known as non-commodity charges.
Government baseline wholesale price (per kWh)	7.5p	This is the maximum amount suppliers can charge for wholesale energy under the energy relief scheme.
Energy Bill Relief Scheme discount	0p	This is the amount of discount you’ll get under the scheme. It’s the wholesale cost minus the baseline price.
Discounted unit rate (per kWh)	7p	This is the discounted amount you’ll pay for each unit of energy under the scheme. It’s your agreed unit rate minus your discount.

*In this example, the discounted rate is equal to the unit rate as the wholesale price is below the threshold for the EBRS discount.

Out-of-contract gas rates:

Here’s how the discount will work for a business on an out-of-contract gas rate of 30p per kWh:

Fixed contract unit rate (per kWh)	30p	This is the price you pay for each kWh unit of energy you use, as stated in your contract.
Wholesale price	16.6p	This is the amount of your unit rate that’s made up of the cost of wholesale energy (this changes daily based on volatility until you accept a fixed contract).
Other costs	13.4p	This is the amount of your unit rate made up of other charges (supplier margins, distribution costs, etc.), also known as non-commodity charges.
Government baseline wholesale price (per kWh)	7.5p	This is the maximum amount suppliers can charge for wholesale energy under the energy relief scheme.
Energy Bill Relief Scheme discount	9.1p	This is the amount of discount you’ll get under the scheme. It’s the wholesale cost minus the baseline price.
Maximum Energy Bill Relief Scheme discount*	9.1p	This is the maximum amount of discount that can be applied to out-of-contract rates.
Discounted unit rate (per kWh)	20.9p	This is the discounted amount you’ll pay for each unit of energy under the scheme. It’s your out-of-contract unit rate minus the maximum discount.

*In this example, the discounted rate is equal to the maximum discount threshold, but if this was higher than the threshold, only the maximum discount would apply under the scheme, 9.1p.

More information is available by speaking to Jason Thackray on 0333 9000 246 or email :
jason.thackray@utilityswopshop.co.uk