On, 21st September 2022, the Government has announced their plans for the new Business Energy Bill Relief scheme, to support businesses with rising energy costs.

The scheme will operate by fixing the electricity and gas wholesale rate at significantly below its current price. 

The wholesale rate is the price that energy Suppliers pay for the actual energy part of the tariff you pay, known as the ‘commodity’.  The ‘commodity’ element of your tariff is approximately 50% of your bill and does not include the ‘non commodity’ costs, such as distribution, transmission and any green levies. It also does not include your standing charge.

This reduction is only applied to the wholesale, or ‘commodity’ element and is not the price that you as a business consumer will pay.

Instead, it is expected that this reduction will be passed on to you when you are presented with a fully loaded (commodity and non-commodity) tariff from our team, so it will still pay for us to go to market on your behalf.  Suppliers will still be competing for your business, only this time the costs will be lower for the first 6 months.  Getting visibility of these new market rates is essential to getting the right contract for you.

Scheme Details:

Whilst the scheme has been announced details of the mechanics of the scheme are still in short supply. We do know that the new ‘capped’ wholesale price is expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter (currently £585.73 for electric and £186.95 gas).

We also know that the price reduction will be applied to energy usage between 1st October 2022 and 31st March 2023. The reduced unit rate will apply to all contracts signed after 1st April 2022 as well as to deemed, variable and flexible tariffs and contracts.

At this stage we do not believe the discount will be presented at the point of contracting, instead we believe it will be sold at the market rate, with the discount applied to relevant bills. After all, the support has only been agreed for an initial 6-month term so contracts will need to be sold at market price so consumers understand the undiscounted rates they could be paying after March 2023. It is not the intention of this scheme to encourage short term contracts.

Right now, Suppliers are working out how they will present prices and provide the discount, but what is important is that the market will remain competitive and consumers will pay less.

If you have any questions or would like to speak to one of our team, please contact us here.