Last week the government announced details of The Energy Bill Relief Scheme which will provide a discount on wholesale gas and electricity prices for all non-domestic customers including all UK businesses, the voluntary sector like charities and the public sector.

The level of price reduction will vary depending on the contract type and circumstances. The relief will automatically be applied to bills and customers do not need to take any action or apply to the scheme to access the support.

How it works

It will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts and the discount applied will be in pence per kilowatt hour (p/kWh).

  • For fixed contracts the discount will reflect the difference between the government supported price and the relevant wholesale price for the day the contract was agreed.
  • 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’ that will determined at the beginning of the scheme.
  • It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial 6 month period for all non-domestic energy users.
  • The savings will be first seen in October bills, which are typically received in November.
  • Suppliers will apply reductions to the bills of all eligible non-domestic customers.
  • The government will compensate suppliers for the reduction in wholesale gas and electricity unit prices that they are passing onto non-domestic customers.

How much will I save?

For all non-domestic energy users in Great Britain the price has been set as follows.

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

For comparison, wholesale costs in Scotland for this winter are currently expected to be around:

  • £600 per MWh for electricity
  • £180 per MWh for gas

Full details on the Energy Bill Relief Scheme can be found here Energy Bill Relief Scheme 

For an idea on how this may impact on your bill, see the examples below.

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 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 3: 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 £3,900 per month. As they are on a variable contract they can receive support up to the Maximum Discount (currently estimated to be £405/MWh for electricity and £115/MWh for gas). Applying the Maximum Discount rates means that their monthly energy bill reduces by around half.

Example 4: 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 £1,400 per month. As they are on a variable contract they can receive support up to the Maximum Discount (currently estimated to be £405/MWh for electricity and £115/MWh for gas). Applying the Maximum Discount rates means that their monthly energy bill reduces by around 45%, leaving them with a bill of around £800 per month.