Mini budget 2022: Energy bill relief scheme

The government has announced the introduction of an energy bill relief scheme to help non-domestic customers with rising wholesale energy prices over the next six months from 1 October. This was published on 23 September 2022.

*For the latest information please see our mini budget summary

Those who may be eligible for this scheme include the vast majority of UK businesses as well as the voluntary and public sectors. To be eligible for support the non-domestic customer must be:

On a fixed price contract that was agreed on or after 1 April 2022;
Signing a new fixed price contract;
On deemed/out of contract or variable tariffs; or
On flexible purchase or similar contracts.

The relief is designed to provide support to businesses at a rate equivalent to the wholesale element of the energy price guarantee for households. This is achieved by giving a discount to customers at the rate of the difference between the wholesale price and the government supported price, which has been set at £211 per megawatt hour for electricity and £75 per megawatt hour for gas. For customers on a fixed term contracts the discount will reflect the difference between the government supported price and the wholesale price on the date the contract was agreed. Variable rate customers will see a discount at the difference between the government supported price and the wholesale price, subject to a maximum discount at the beginning of the scheme (currently estimated to be £405 per megawatt hour for electricity and £115 per megawatt hour for gas).

In practice, this means that for a business on a variable rate tariff using an average of 5 megawatt hours of electricity per month and 5 megawatt hours of gas per month, a discount of £2,600 will apply.

The support will be implemented via a reduction in the bills from suppliers to all eligible non-domestic customers. The government will then compensate suppliers for the reduction passed on to customers. This means that prices will still vary per individual contract with the level of discount applying to only the wholesale element of electricity and gas prices.

The reduction in prices also includes the removal of green levies paid by non-domestic customers. In some cases, bills may still show the green levies, but these will be recovered through the discount which is given.

Find out more

Please do get in touch with our contacts below to discuss this further and we’ll be happy to help you understand what today’s announcements mean for you.

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