Background
The Energy Bill Relief Scheme was established to require licensed energy suppliers to provide a discount on wholesale gas and electricity prices for all non-domestic Customers whose current gas and electricity prices have been significantly inflated in light of global energy prices.
Fundamentally, eligible customers will receive a discount on their gas and electricity unit prices between 1st October 2022 and 31st March 2023.
It is calculated by comparing the estimated wholesale portion of the unit price that would be paid this winter against a baseline ‘Government supported price’. The discount will effectively be a credit of this calculated difference, most likely in the form of a p/kWh for all metered consumption against the appropriate rate
Eligibility
The Department for Business, Energy & Industrial Strategy (BEIS) have advised that the scheme applies to all businesses, voluntary sector organisations (i.e. charities) and public sector organisations (i.e. schools and hospitals) who are:
On a fixed Contract, signed on or after 1st December 2021
On a deemed/out of contract tariff
On a flexible Contract
The agreement date effectively reflects the point at which the supply contract became legally binding. Typically this will be the date the supplier provided confirmation/acceptance notifications.
The latest guidance can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1114998/ebrs-gb-ni-guidance.pdf
Suppliers will have likely been in touch to notify you how these charges should appear on your bills through this period and any discount you are due to receive based on your contractual terms. If you are unsure, please contact your Supplier.
Government Supported Price & Discount
For all non-domestic energy users in Great Britain the Government supported price has been set at:
Electricity: £211/MWh (21.1p/kWh)
Gas: £75/MWh (7.5p/kWh)
The base discount rates are updated weekly (to include the prior week dates) according to the reference wholesale price. This is the wholesale energy price which the government has determined to reflect the winter commodity price at the time a customer locked into their utility contract.
Combining the reference wholesale price and the government supported price allows the Base discount rates to be determined. This is the difference between the two on the date the Customer locked into their contract.
The base discount rates are then applied to the Customers contracted retail unit price. This is the all-in price charged per unit in respect of the supply of energy by a supplier to a customer under a supply contract (prior to the reduction under the EBRS). This takes into account all rates within the supply contract which are chargeable as p/kWh, excluding VAT and CCL and is volume weighted average if on multi-rate contract.
In some situations, Customers will be subject to a maximum discount – this is the maximum amount of discount available to take the retail unit rate being charged down to the Government supported price. This maximum discount applies to deemed and flexible contracts. It has been calculated by the Government by comparing the government supported price with the average of expected wholesale prices for delivery across the 6 months of the scheme. The maximum discount is £345/MWh (34.5p/kWh) for electricity and £91.50/MWh (9.1p/kWh) for gas.
Fixed Contracts
The discount reflects the difference between the government supported price & the relevant retail unit price for the date the contract was agreed, except when that takes the rate below the government supported price in which case it is the difference between the government supported price and the retail unit rate
The discount will be applied against all metered consumption, which will not go below the Government supported price. If the retail unit rate is below the Government supported price for the day you signed your contract you will not receive a discount.
For multi-rate customers, most likely a single weighted average unit wholesale energy rate will be calculated to determine the discount to use for the total metered consumption.
Example 1 (Single Rate)
Example 2 (Single Rate)
Example 3 (Multi Rate)
Deemed / Out Of Contract
The applied discount is based on BEIS' published value subject to the retail unit rate not falling below the Government supported price and subject to a maximum discount amount.
Example
Flexible Contract
The discount reflects the difference between the Government supported price and the weighted average price (WAP) for the period, but is subject to the maximum discount.
Shaping costs etc. – BEIS guidance is that WAP should not include any costs related to trading fees, volume tolerance, shape/imbalance premiums etc.
Example 1
Example 2
