There are lots of updates happening right now regarding the Government's Business Energy Price Cap, in this blog we answers your questions. This blog will be updated with new information as and when.
Last updated: 1st December 2022
The purpose of this article is to provide responses to frequently asked questions about the Business Energy Price Cap, also referred to as the Energy Bill Relief Scheme. The Scheme came into law on 1st November 2022.
The Business Energy Price Cap is a support mechanism put in place by the government to reduce the impact of the Ukraine conflict on energy prices this winter. It provides a level of discount to the wholesale element of energy bills for all non-domestic energy users.
All non-domestic energy users are eligible, but please note that support for fixed contracts will only apply to agreements put in place after 1st December 2021. It is also important to note that, if your wholesale energy costs are below the price cap, you will not receive any discount.
The scheme covers those on fixed contracts with the relevant 1st December 2021 cut-off point, as well as deemed, variable and flexible tariffs.
Yes, the information released on Tuesday 11th October 2022 noted that BEIS had changed the date for fixed contracts to qualify for the discount from 1st April 2022 to 1st December 2021.
The scheme will go live on 1st October 2022 and run for six months to 31st March 2023. The government is planning a review midway through before outlining if there will be any additional, future support for non-domestic customers.
The wholesale prices are capped at 21.10p/kWh for electricity and 7.50p/kWh for gas. Please note the discount is only applied to the wholesale element of your energy costs. Delivered costs will be higher than 21.10p/kWh for electric & 7.50p/kWh for gas respectively.
For fixed contracts, the discount will reflect the difference between the price cap and the relevant wholesale price the day the contract was agreed. The government has published the wholesale prices used to calculate the discount for each day from 1 December 2021. BEIS are providing a weekly updated view of these discounts to capture any new fixed contracts signed. For variable, deemed and all other contracts, there is a maximum discount, which is designed to limit the total cost of the support scheme to government. This means that some customers may end up paying higher than the cap for their wholesale energy, depending on the terms of their contract. The maximum wholesale discount is 34.50p/kWh for electricity and 9.10p/kWh for gas.
Support comes in the form of a discount to the wholesale price. This means that non-wholesale costs, such as levies and network charges, will still apply and be specific to each supply on a case-by-case basis. For flexible contracts, a discount will only apply in instances where the monthly weighted average price is above the price cap. These figures are set by the framework suppliers in accordance with BEIS’ stipulations. Looking at the cap in isolation, we estimate that the Supported wholesale Price would see a typical delivered p/kWh at the below levels between 1 October 2022 and 31 March 2023:
This may still vary site-to-site so should be considered as a guide only until further details are confirmed. Please note that for any fixed contracts signed prior to 1st December 2021, or any fixed or flexible contracts where the achieved price is below the cap, these estimates are not applicable.
*This has been updated to reflect confirmation that the shaping element of a customer’s portfolio is not included in the application of the EBRS discount. Should there be any updates to the scheme that permit suppliers to include shaping fees within the EBRS discount, LASER will update customers accordingly.
The exact details are still being finalised; however, npower have confirmed the following:
Where applicable the relief will be displayed as a credit line per supply within your invoice. The invoice line will display the total consumption (kWhs) of each meter and the relief rate (p/kWh).
The relief will be single rate for all sites within a Flexible Purchasing Basket (PIA/PWP/FSAR Electricity) and will only be applied for qualifying months. For clarity, if we have successfully traded below the cap in any calendar month, a relief would not be applied. Further details will be communicated once verified).
LASER is continuing to work with other framework suppliers to confirm how they will apply the relief to their energy bills.
It has been confirmed that the relief for energy used in October will be applied to your October consumption invoice.
Suppliers are still finalising details and, as a result, there will be delays in issuing October 22 flexible prices. We will continue to keep you updated as more information becomes available.
Due to the rapid timescales of the scheme and the passing of legislation, passed into law on 1st November 2022, there will be delays in receiving your October 2022 consumption invoices. We are working to minimise the impact of this with the suppliers and will keep you informed as this progresses.
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