The Energy Bill Relief Scheme – a complete guide

The UK Government’s Energy Bill Relief Scheme is designed to support commercial energy customers in paying their energy bills this winter. In this guide, we explain how your business can take advantage of this new government scheme.

Limited company owners have had a variety of challenges to contend with over recent years. From Brexit and supply chain disruption to government restrictions surrounding the global COVID-19 pandemic, businesses have absorbed new overhead costs right across the board.

But in recent months, UK companies have been forced to contend with a new and unprecedented challenge: a colossal rise in energy prices.

Some estimates have placed the average hike in commercial energy prices at up to 180% year-on-year – subsequently leading to a rise in the number of business insolvencies taking place across the UK.

Fortunately, the UK Government has responded to growing energy concerns by establishing a new funding scheme to assist limited company owners to keep the lights on so they can continue trading.

This guide will explain what the Energy Bill Relief Scheme is, how it works, and how much financial support your business may be eligible to receive as part of the scheme.

What is the Energy Bill Relief Scheme?

The Energy Bill Relief Scheme is a financial support package designed to help non-domestic energy customers pay for their energy bills. The scheme is designed to support all businesses in Great Britain. This means that non-domestic energy users in England, Wales, and Scotland will be eligible to receive support.

Businesses in Northern Ireland can receive support through a separate scheme specific to N. Ireland.

The Energy Bill Relief Scheme applies to all energy usage that takes place between 1 October 2022 and 31 March 2023, and each eligible company’s discount should be applied automatically.

Who’s eligible for the Energy Bill Relief Scheme?

The UK Government’s latest business support package offers a fairly inclusive set of eligibility requirements.

The scheme is open to all non-domestic energy contract customers. This includes:

• Businesses
• Charities and other voluntary sector organisations
• Public sector organisations like schools, hospitals and care homes

To be eligible as a business, charity, or public sector organisation, your company or non-profit must also fall into one of the following camps. You must either be:

• On an existing fixed price contract that was agreed on or after 1 December 2021
• In the process of signing a new fixed price contract
• On a deemed, out-of-contract, or variable tariff
• On flexible purchase or similar contracts

That being said, there are also a couple of exclusions to bear in mind.

For example, businesses that use gas or electricity to generate power they want to sell back onto the grid are excluded. This might include companies that operate a power station or grid-level battery storage system.

The scheme also mandates that non-domestic customers and suppliers can’t profit from the scheme. If a business is found to profit from the relief package outside simply saving on energy overheads, that business will be expected to refund its support funding back to the government (and may be subject to extra penalties).

How much funding can you receive from the scheme?

The Energy Bill Relief Scheme offers customers a discount based on the gas and electricity unit prices that they’re already paying as part of their existing commercial energy contracts.

To figure out the discount you’re eligible to receive, the estimated wholesale portion of each unit price you’d be paying will get compared to a baseline ‘government-supported price’ for the 2022/23 winter.

This government-supported price is:

• £211 per megawatt hour (MWh) for electricity
• £75 per MWh for gas

As a point of reference, wholesale costs in the UK are currently forecasted to hit around £600 per MWh for electricity and £180 per MWh for gas — which means this is a pretty large discount the government is offering.

But as you’d expect, the exact amount of money your business stands to save will depend on your energy consumption over the lifetime of the scheme.

If your business is based in Northern Ireland, the discounted prices you’ll be expected to pay will differ. That’s because non-domestic energy suppliers only offer limited numbers of fixed-price contracts in Northern Ireland.

How does the scheme work?

You do not need to apply to receive financial support as part of the government’s Energy Bill Relief Scheme.

Suppliers are obliged to identify you as a non-domestic customer and apply reductions automatically. Your discount will then be applied in pence per kilowatt hour (p/kWh) if you’re on a variable rate contract. For businesses on a fixed rate contract, your discount will reflect the government supported price against the wholesale price on the day in which your contract was agreed.

This discount should then be applied towards any bill that relates to your organisation’s energy consumption between 1 October 2022 and 31 March 2023.

Want to learn more about the Energy Bill Relief Scheme?

Although this scheme has already come into force, it’s important to bear in mind that government support packages can evolve over time — and additional or different support may be available over the course of the Energy Bill Relief Scheme.

To make sure you’re constantly up-to-date on government guidance and support, you should regularly check back on the GOV.UK website. Additionally, it could be worth sitting down with a chartered accountant or members of your company’s finance team to find out what other business relief may be available this winter.

The UK Government has also issued a recent warning about fraudsters promoting fake energy bill relief schemes to trick business owners into giving away personal details. As a result, the government has encouraged anyone who’s received suspicious messages to report those messages immediately.

If you want to learn more about business relief schemes, limited company filing requirements, or how to form a UK limited company, you should explore the Rapid Formations Blog. There, you’ll find loads of business tips, details on filing requirements and finance, the company formation process, and more.