The government has announced plans to introduce a cap on wholesale energy bills for businesses.
Energy Bill Relief Scheme full announcement: Link
Key Points:
The government have today announced the unveiling of The Energy Bill Relief Scheme which will
see wholesale energy prices for all firms capped for six months from 1 October
Officials have not yet put an overall price tag on the latest subsidy to firms as the ultimate cost will
depend on what happens to the wholesale market price between October and April when the support
expires.
Under the scheme, revealed by the Department for Business, Energy and Industry (BEIS), wholesale
prices are expected to be fixed for all non-domestic energy customers at £211 per MWh for
electricity and £75 per MWh for gas. It will apply to energy usage from 1 October 2022 to 31 March
2023. Firms do not need to contact suppliers as this will be automatically applied to them.
The scheme will also apply to fixed contracts agreed on or after 1 April and variable and flexible tariffs
and contracts.
More details:
The level of price reduction for each business will vary depending on their contract type and
circumstances:
• Non-domestic customers on existing fixed price - will be eligible for support as long as the
contract was agreed on or after 1 April 2022. Provided that the wholesale element of the price
the customer is paying is above the Government Supported Price, their per unit energy costs
will automatically be reduced by the relevant p/kWh for the duration of the Scheme.
Customers entering new fixed price contracts after 1 October will receive support on the same
basis.
• Default, deemed or variable tariffs - will receive a per-unit discount on energy costs, up to a
maximum of the difference between the Supported Price and the average expected wholesale
price over the period of the Scheme. The amount of this Maximum Discount is likely to be
around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market
developments. Non-domestic customers on default or variable tariffs will therefore pay
reduced bills, but these will still change over time and may still be subject to price increases.
This is why the Government is working with suppliers to ensure all their customers in England,
Scotland and Wales are given the opportunity to switch to a fixed contract/tariff for the
duration of the scheme if they wish, underpinned by the Government’s Energy Bill Relief
Scheme support.
• Businesses on flexible purchase contracts - typically some of the largest energy-using
businesses, the level of reduction offered will be calculated by suppliers according to the
specifics of that company’s contract and will also be subject to the Maximum Discount.
