The Government has announced its energy relief support package for charities, businesses, and public sector organisations. CFG takes at look at the details.
The Energy Bill Relief Scheme was unveiled by Business Secretary Jacob Rees-Mogg on Wednesday 21 September.
The scheme will provide a discount on wholesale gas and electricity prices for all non-domestic customers, which includes the voluntary and public sectors. The support is equivalent to the Energy Price Guarantee that has been put in place for households.
Discounts will be applied to energy usage initially between 1 October 2022 and 31 March 2022. As with the Energy Price Guarantee, charities will not need to apply to receive the support; it will be automatically applied to bills.
A supported wholesale price has been set (£211 per MWh for electric and £75 for gas). This is less than half the price expected for this winter. The discount depends on the contract type:
Fixed price contracts
Charities on existing fixed price contracts will be eligible if the contract was agreed on or after 1 April 2022 and where the wholesale price you are paying is above the price set out above. The price will be reduced automatically.
If your organisation entered a fixed price contract after 1 October 2022 you will receive support on the same basis.
Default, deemed and variable tariff
If you're on a default, deemed or variable tariff you will receive a per unit discount. i.e. the difference between the supported price set out and the average wholesale price over the period of the entire scheme.
Your organisation will pay reduced bills if you are on this type of contract, but it's possible you will still see an increase in bills. This is because there is a maximum discount that will be calculated by comparing the government supported price above with the average of expected wholesale prices for delivery across the six months of the scheme. This will be confirmed on 30 September.
The Government will look to help organisations switch to a fixed term contract during the scheme.
Flexible purchase contracts
The third kind of support is for those on flexible purchase contracts which tend to be the largest energy users. This won't apply for the vast majority of charities but, for those that it does, the support will be calculated by suppliers according to the specifics of the contract.
The maximum discount will also apply to any charities that use this kind of contract.
Not on the electricity or gas grid?
For organisations in rural areas, if you are not connected to either the gas or electricity grid, equivalent support will also be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas. Further detail on this will be announced shortly.
Review of the Scheme
Finally, a review will be published in three months to determine the support offered after March 2023 to find the 'most vulnerable non-domestic consumers'.
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.
It's crucial that charities are consulted as part of this process to ensure they are considered when the time comes. We will work with charity partners to ensure the sector’s voice is heard.
For more information, visit the guidance on the government website. If you have any policy-related questions, or would like to share your thoughts on the scheme, please email the team.