Following the announcement from the government on the Energy Bill Relief Scheme (EBRS), we have compiled a list of some common questions being asked around the EBRS. This will also include any information and questions on the Energy Bill Discount Scheme (EBDS).
We will be updating this page with more questions as they come in.
The government has released a survey for the Energy Bill Relief Scheme to better understand the energy needs of various economic sectors. These surveys are being spearheaded by umbrella organisations which represent different types of business across the country; you may already have received an invitation to take part. You can find out more here and also find a link to the survey.
If you would like any further information, please contact your dedicated Consultant and we will be happy to help you. Or you can get in touch with us here: https://consultus.com/contact/
Following the latest guidance (10/10/2022), the scheme now applies to:
- FIXED PRICE CUSTOMERS: The majority of customers who have signed contracts for gas and/ or electricity since 1st December 2021. There are some periods when prices were below the government’s cap price and therefore all clients should seek clarity as to whether they are eligible.
- FLEXIBLE CUSTOMERS: All customers with contracts including the winter period (Oct-22 to Mar-23 inclusive) are eligible, regardless of when the energy was hedged. Only customers with prices above the cap will be eligible for relief.
- OUT OF CONTRACT (OOC) CUSTOMERS: All OOC (or “deemed”) customers are eligible.
The scheme presently covers electricity and gas used during the period of 1st October 2022 through to 31st March 2023. It is open for all businesses, charity sector and public sector organisations regardless of size.
There are a very few exceptions – businesses that might gain or profit from the scheme are excluded, such as those operating in the generation sector or selling power to the grid.
The government is consulting on extension of the scheme beyond 31st March 2023; it may be that certain sectors (deemed as economically vulnerable) will continue to be covered, but there is no indication presently as to who this might be exactly. The government’s review is set to conclude by the end of this year, when more details will be released.
The government has set a price cap for the energy price; these have been set at:
- £211/MWh (21.1p/kWh) for electricity;
- £75/MWh (7.5p/kWh, equivalent to 219.80 p/therm) for gas.
Eligible customer prices will be discounted to these levels, subject to the following:
- FIXED PRICE CUSTOMERS: All customers who are eligible will receive a discount to the price cap levels, regardless of the wholesale price of energy at the time they signed their agreement.
- FLEXIBLE CUSTOMERS: Will receive a discount to their monthly prices for any months where their wholesale market rate is above the price cap, subject to the Maximum Discount mechanism (see below).
- OOC CUSTOMERS: Will receive a discount to their prices subject to the Maximum Discount
The government is willing to discount the customer’s energy price to the caps provided their wholesale energy price is within a Maximum Discount limit. These have been set as follows:
- ELECTRICITY: The Maximum Discount is set at £345/MWh; this means that provided the customer’s wholesale cost is at or below £556/MWh[1], then the customer will receive the full discount to £211/MWh.
- GAS: The Maximum Discount is set at £91/MWh; this means that provided the customer’s wholesale cost is at or below £166/MWh[2], then the customer will receive the full discount to £75/MWh.
If the customer’s wholesale energy price is above the Maximum Discount, then their price is discounted to the cap plus the difference to the Maximum Discount.
For example, an electricity customer with a wholesale energy rate at £600/MWh will receive a discount to:
- £600/MWh minus £556/MWh = £44/MWh → £44/MWh plus £211/MWh cap = £255/MWh
Therefore, the client receives the full discount, but not the full benefit of the price cap.
[1] £211/MWh cap plus the Maximum discount at £345/MWh = £556/MWh
[2] £75/MWh cap plus the Maximum discount at £91/MWh = £166/MWh (equivalent to 486.5 p/therm)
Eligible customers will have the discount automatically applied to their invoices. Suppliers may differ in how this looks, but effectively, the discount will be applied as a separate line item on the bill.
Customers will be billed their agreed contract rate, including any Day/ Night splits as per usual. Their bills will then also show a single p/kWh discount (a negative p/kWh rate) for all of their usage that month to discount the overall bill.
For the avoidance of doubt, the government has produced a table showing the discount that will apply for customers depending on when their contract was agreed. This will be updated weekly for customers yet to sign fixed price contracts.
Yes, definitely; the Maximum Discount is likely to work out much more favourably for clients who are in supply contracts than for those on OOC rates; this is because OOC rates charged by suppliers are far in excess of wholesale market rates.
The government is urging all clients to enter contracts as soon as possible.
Customers should continue to look to hedge their power and gas requirements in the usual way. The government has pointed out that the scheme should not be “gamified” by customers for their gain and suppliers will be audited to ensure that no customers have sought to take advantage of the scheme. Customers found to have undertaken unusual hedging activity may be subject to financial penalties and may find they become ineligible for the relief.
Yes, any customers with financial instruments or hedges in place should notify their supplier of the arrangements. This is to ensure the scheme is fair and that customers do not receive unwarranted discounts.