Energy Bill Relief Scheme: help for businesses and other non-domestic customers

These schemes provide energy bill relief for non-domestic customers in Great Britain (GB) and Northern Ireland (NI). Discounts will be applied to energy usage initially between 1 October 2022 and 31 March 2023.

This guidance covers both the GB and NI schemes, and explains any differences between them.

9 January 2023

The Government has announced a new Energy Bills Discount Scheme (EBDS) from April 2023 to April 2024 for eligible non-domestic consumers in Great Britain and Northern Ireland.

The current Energy Bill Relief Scheme announced in September comes to an end in March 2023. It supports businesses and public sector organisations such as schools and hospitals by providing a discount on wholesale gas and electricity prices.

Eligible non-domestic customers facing significantly inflated gas and electricity prices in light of global price pressures, triggered by Russia’s invasion of Ukraine, have benefitted from the discount since 1 October 2022.

On 17 October it was announced that an HM Treasury-led review of the scheme would determine support beyond March 2023.

The government has been clear that current levels of support were time-limited and intended as a bridge to allow businesses to adapt. Wholesale gas prices have now fallen to levels just before Putin’s invasion of Ukraine and have almost halved since the current scheme was announced. The EBDS therefore strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion based on estimated volumes.

For more detail, see the Energy Bills Discount Scheme

Update: 29 December 2022

The government has announced that support comparable to EBRS will be extended to non-domestic energy customers who receive gas or electricity via public networks from non-licensed providers: see the EBRS: non-standard supplies of energy section.

The discount is automatic. If you get a message asking for your bank details, this could be a scam. You can report messages you think are suspicious.

Eligibility

The scheme will be available to everyone on a non-domestic contract including:

businesses
voluntary sector organisations, such as charities
public sector organisations such as schools, hospitals and care homes

who are:

on existing fixed price contracts that were agreed on or after 1 December 2021
signing new fixed price contracts
on deemed / out of contract or standard variable tariffs
on flexible purchase or similar contracts
on variable ‘Day Ahead Index’ (DAI) tariffs (Northern Ireland scheme only)

If you’re not connected to the gas grid

The government will provide a fixed payment of £150 to all UK non-domestic consumers who are off the gas grid and use alternative fuels, with additional ‘top-up’ payments for large users of heating oil based on actual usage. This support will be delivered as soon as possible this winter.

Exclusions

These schemes are intended to be of broad application but there are limited exclusions. These include:

where gas and/or electricity is not supplied via a licenced supplier
gas or electricity used to generate electricity to be sold to the grid, including where this has been stored first (under battery or pumped storage)
any gas or electricity to be used to provide heating, cooling, hot water or electricity for end users in the Republic of Ireland (Northern Ireland scheme only)

Some large energy users may protect themselves from exposure to wholesale price changes by ‘hedging’ in the energy or financial markets. In these circumstances, their overall exposure to wholesale prices may end up being greater or less than the Reference Wholesale Price reflected in relation to the Supply Contract. If certain criteria are met, the level of EBRS support provided will be amended by their energy supplier to account for this. For more detail, see the Energy Bill Relief Scheme Guidance (Great Britain and Northern Ireland) available on the Scheme documents page.

The scheme is intended to provide relief on energy bills. Non-domestic suppliers and consumers must not profit from the scheme other than for its intended purpose.

Abuse of scheme arrangements could result in:

a reduction in payments
action taken by Ofgem (the Great Britain energy regulator) or UREGNI (the Northern Ireland utility regulator) against a supplier pursuant to the enforcement sections of the regulations (regulation 67, EBRS GB Regulations and regulation 72, EBRS NI Regulations)

The amount your bills will be reduced

The government will provide a discount on your gas and electricity unit prices. To calculate your discount, the estimated wholesale portion of the unit price you would be paying this winter will be compared to a baseline ‘government supported price’ which is lower than currently expected wholesale prices this winter.

For all non-domestic energy users in Great Britain and Northern Ireland this government supported price has been set at:

electricity – £211 per megawatt hour (MWh) / 21.1p per kilowatt hour (KWh)
gas – £75 per MWh / 7.5p per KWh

For comparison, when the scheme was announced, wholesale costs in England, Scotland and Wales for this winter were expected to be around:

electricity – £600 per MWh / 60p per KWh
gas – £180 per MWh / 18p per KWh

To ensure a level of support comparable to the domestic scheme and consistency between the domestic and non-domestic schemes, the government supported price is based on the implied wholesale element of the Energy Price Guarantee. However, the final per unit price paid by non-domestic customers will differ as it will also reflect other costs such as network charges and operating costs, plus the impact of competition between suppliers. The Energy Bill Relief Scheme is not subject to a price cap review, unlike the Ofgem price cap for the domestic market and the approach taken by the Energy Price Guarantee.

How it works

Applying the reduction

Suppliers will automatically apply reductions to the bills of all eligible non-domestic customers. Customers do not need to apply for their discount.

If you think your supplier is not applying the discount correctly, you should contact your supplier in the first instance.

The government will compensate suppliers for the reduction in wholesale gas and electricity unit prices that they are passing on to non-domestic customers.

The discount applied will be in pence per kilowatt hour (p/kWh). The p/kWh government support for comparable contracts will be the same across suppliers, but the absolute level of individual bills will continue to vary across different contracts and tariffs.

Suppliers are required to ensure that where discounts are being applied under the scheme, they are subject to a minimum supply price set at the government supported price for gas and electricity. More information on this has been provided in the rules and guidance published on the Energy Bill Relief Scheme (EBRS): scheme documents page.

Fixed contracts

For fixed contracts the discount will reflect the difference between the government supported price and the relevant wholesale reference price for the day the contract was agreed. We publish the relevant wholesale prices we will use for calculating this for each day from 1 December 2021.

Customers who signed their fixed rate contract before 1 December 2021 will not have been exposed to volatile wholesale prices, so will not be eligible for support under the scheme

Variable, deemed and all other contracts

For variable, deemed and all other contracts, the discount will reflect the difference between the government supported price and relevant wholesale price, but be subject to a ‘maximum discount’:

electricity – £345 per MWh
gas – £91 per MWh

We publish the discounts for fixed and variable contracts, alongside the relevant reference wholesale prices on a weekly basis.

Businesses on variable / flexible contracts will need to choose whether they move to fixed contracts. This is likely to suit businesses who don’t want to be exposed to price variation. You will be contacted by your supplier.

The p/kWh government support for comparable contracts will be the same across suppliers, but the absolute level of individual bills will continue to vary.

Out of contract and deemed tariffs

For out of contract and deemed tariffs, the regulations set out the following process for suppliers to apply the discounts to customers.

A supplier must apply both:

a) the relevant wholesale price discount and

b) the discount for qualifying financially disadvantaged customers (QFDCs), if applicable, as set out in Part 5 of the EBRS GB Regulations and the EBRS NI Regulations.

Part 5 of the Regulations makes separate provision for suppliers to provide an additional discount for certain QFDCs. The aim is to mitigate the financial disadvantage experienced by QFDCs in obtaining an affordable supply of energy. This may be, for example, due to their poor credit rating or because of their high energy usage.

For more information on how this applies to QFDCs, see:

Day Ahead Index (DAI) contracts – Northern Ireland scheme only

For DAI contracts, the discount will reflect the difference between the government supported price and the relevant wholesale reference price. The wholesale reference price will be calculated monthly by BEIS. This reference price will be based on a Northern Ireland volume weighted average across the published day-ahead prices for a given month.

Flexible price contracts

For flexible price contracts, the relevant wholesale reference price is the contracted wholesale price on a volume-weighted average basis for that period, according to Regulation 11 of the EBRS GB Regulations and EBRS NI Regulations.

Third party intermediaries (TPIs) and energy brokers

Third party intermediaries (TPIs) and energy brokers have no influence over the per unit cost reductions that will be applied to energy costs under the scheme. You do not have to take out a new contract or change your contract for appropriate reductions to automatically be applied to your bills.

Intermediaries

Any intermediary in England, Wales, Scotland or Northern Ireland, that will be or has been provided with EBRS support, must pass this support on, in a just and reasonable way, to end users such as customers of heat networks and park home residents. For more information, see the guidance on pass-through requirements for support provided to intermediaries, including for heat networks.

Examples

The level of support for each organisation will vary depending on type and date of contract.

These are illustrative examples only, based on recent averages of forward wholesale prices. Prices may differ from those experienced in practice.

Example 1: A pub

A pub uses 4 MWh of electricity and 16 MWh of gas a month. They signed a fixed contract in August 2022, giving them a current monthly energy bill of about £7,000. At the time they signed their contact, wholesale prices for the next 6 months were expected to be higher than the government supported price of £211/MWh for electricity, and £75/MWh for gas, meaning they can receive support under this scheme.

The difference between expected wholesale prices when they signed their contract and the government supported price is worth £380/MWh for electricity and £100/MWh for gas, meaning they receive a discount of £3,100 per month, reducing their bill by over 40%.

Example 2: A school

A school uses 10 MWh of electricity and 22 MWh of gas a month. They signed a fixed contract in July 2022, giving them a current monthly energy bill of about £10,000. At the time they signed their contact, wholesale prices for the next 6 months were expected to be higher than the government supported price of £211/MWh for electricity, and £75/MWh for gas, meaning they can receive support under this scheme.

The difference between expected wholesale prices when they signed their contract and the government supported price is worth £240/MWh for electricity and £70/MWh for gas, meaning they receive a discount of £4,000 per month, reducing their original bill by 40%.

Example 3: A medium sized manufacturing business

A medium sized manufacturing business uses 200 MWh of electricity and 1,600 MWh of gas each month. They entered into a fixed contract in August 2022, giving them a current monthly energy bill of around £560,000. At the time they signed their contact, wholesale prices for the next 6 months were expected to be higher than the government supported price of £211/MWh for electricity, and £75/MWh for gas, meaning they can receive support under this scheme.

The difference between expected wholesale prices when they signed their contract and the government supported price is worth £360/MWh for electricity and £90/MWh for gas, meaning they receive a discount of £215,000 per month, reducing their original bill by more than 35%.

Example 4: A medium sized restaurant

A medium sized restaurant uses around 3.5 MWh of electricity and 4 MWh of gas each month. They are on a variable contract, giving them a current monthly energy bill of around £3,600 per month. As they are on a variable contract they can receive support up to the maximum discount (£345/MWh for electricity and £91/MWh for gas). Applying the maximum discount rates means that their monthly energy bill reduces by over 40%.

Example 5: A hospital

A hospital uses around 2,000 MWh of electricity and 7,900 MWh of gas each month. They are on a fixed contract that they signed in June 2022, giving them a current monthly energy bill of about £1.7 million. At the time they signed their contact, wholesale prices for the next 6 months were expected to be higher than the government supported price of £211/MWh for electricity, and £75/MWh for gas, meaning they can receive support under this scheme.

The difference between expected wholesale prices when they signed their contract and the government supported price is worth £76/MWh for electricity and £27/MWh for gas, meaning they receive a discount of £370,000 per month, reducing their original bill by over 20%.

Example 6: A small retail shop

A small retail shop uses around 1 MWh of electricity and 2 MWh of gas each month. They are on a variable contract, giving them a current monthly energy bill of around £1,300 per month. As they are on a variable contract they can receive support up to the maximum discount (£345/MWh for electricity and £91/MWh for gas). Applying the maximum discount rates means that their monthly energy bill reduces by around 40%, leaving them with a bill of around £800 per month.

Supplier obligations

Suppliers should have been in contact with non-domestic customers to provide information about the implications of the scheme.

For customers with supply contracts in force as of 27 October 2022 (fixed, flexible or variable), suppliers are required to determine the contract type and inform customers of this by 11 December 2022 (45 days after the 27 October 2022 when the scheme was introduced). If a customer disagrees with the classification of the contract, the customer should notify the supplier within a reasonable time.

For customers entering into a contract after 27 October 2022, suppliers are required to determine the contract type at the point when the contract is entered into or by 11 December (45 days after the 27 October 2022 when the scheme was introduced), whatever is the later date.

Suppliers will inform their customers of:

the amount of the discount
the discounted supply price
the amount by which its charges for supply in the billing period have been reduced by applying the discount or the basis on which that amount can be determined. For each subsequent billing period suppliers must inform their customers of the above within 15 days of issuing the customer invoice or statement of account.

BEIS has developed a robust compliance regime and will be performing compliance checks on all suppliers to ensure they comply with the rules of the scheme. Where we consider there may be non-compliance with the scheme on the part of the supplier, we will consider referring the case to Ofgem (GB) or UREGNI (NI). They will explore enforcement options where the suspected non-compliance relates to matters which are relevant requirements on a regulated person.

We have published technical guidance for energy suppliers on the operation of the scheme.

Reviewing the scheme

HM Treasury are conducting a review into the operation of the scheme and decisions on continuing support will be announced by 31 December 2022.

See the terms of the review.

The review will consider:

how effective the scheme has been in giving support to vulnerable non-domestic customers
which groups of non-domestic customers (by sector, size or geography) remain particularly vulnerable to energy price rises, taking into account the latest price position and forward curves, alongside other cost pressures
how to continue supporting these customers – either by extending the existing scheme for some users, or replacing with a different scheme

While we recognise that some businesses may continue to require support beyond March 2023, the overall scale of support the government can offer will be significantly lower and targeted at the most affected to ensure fiscal sustainability and value for money for the taxpayer. Continuing support to those deemed eligible would begin at the end of the initial 6-month support scheme, without a gap.

It is important that users who are less vulnerable to energy price increases (particularly larger businesses that are not energy-intensive) use the 6 months support provided by the scheme to identify measures they can take to protect themselves against high energy prices.

EBRS legislation, rules and guidance

The Energy Prices Act 2022 provided government with the powers to establish the EBRS, ensure scheme benefits are passed on to consumers, and provide for an effective compliance and enforcement regime. Subsequent regulations have been made under these powers.

See the Energy Bill Relief Scheme: scheme documents for all the relevant regulations, rules and guidance for energy suppliers, scheme administrators and non-domestic energy customers.

EBRS for customers with non-licensed providers or with non-standard energy supplies

Support comparable to EBRS is being extended to non-domestic energy customers who receive gas or electricity via public networks from non-licensed providers.

This small group was not covered by the EBRS legislation but will now be able to apply for non-standard EBRS payments from January 2023.

We are currently seeking evidence from non-licensed providers of energy or those which provide energy to businesses in non-standard ways, and welcome responses by 20 January 2023.

We will publish the full eligibility criteria in January. If you believe one of these scenarios applies to your organisation or your energy supply chain, email [email protected] so we can assess your eligibility.

Other support for business/non-domestic customers

There is a range of ongoing schemes in place to support businesses with their energy costs. These include:

the Industrial Energy Transformation Fund (IETF), which supports manufacturers in England, Wales and Northern Ireland with high energy use to cut their energy bills and emissions by investing in energy efficiency and low-carbon technologies. Sites in Scotland can apply for grant support through the Scottish IETF
a number of advice and support schemes that businesses may be eligible for, to help to improve the energy performance of buildings and processes and lower their energy bills. Search for local schemes that provide advice and grants
the UK Business Climate Hub which provides practical steps on cutting emissions and saving money. If businesses are based in England, they may also be able to access support via local Growth Hubs, who they can get in touch with to find out more
a package of targeted support over the next 5 years will support businesses as they transition to their new bills, protect businesses from the full impact of inflation, and support our high streets: see the Autumn Statement for further information.