Please find a useful update from Gerard Duggan and the team at Utilitrack.
The Government has provided more information on the energy support package for business. The Energy Bill Relief Scheme will provide, from 1st October 2022 to 31st March 2023, a discount on the bills of all businesses, charities and the public sector. The discount applies to all fixed contracts signed after 1st April 2022.
Commercial bills are made up of commodity and non-commodity charges. The discount being offered is in the wholesale element of a business’s energy costs. This means the wholesale electricity price is capped at 21.1p per kWh (£211 MWh). At the time of writing this note, the wholesale rate is circa £415.00 per MWh; rates have been as high as £716.00 in the last 30 days. Wholesale gas prices have been capped in a similar way at 7.5p per kWh or £75 MWh.
Both rates will see the green levies removed from energy costs.
But what hasn’t been made very clear, is the remaining non-commodity costs, risk premium and the suppliers’ margins will be added to the new base price of 21.1p and 7.5p respectively.
Suppliers will be busy adjusting billing systems to reflect the rates during October, ready to implement on 1st November but back dating the discounted costs to 1st October.
At this stage it is unclear if the Treasury will be putting a ceiling on the maximum support for wholesale costs. Jacob Rees Mogg is planning to review the situation in three months.
Vulnerable sectors of the economy, such as Hospitality, are likely to see the scheme extended to June 2023. No one knows, at this stage, what other sectors will be added to the definition of ‘vulnerable’.
Those on deemed, default and variable tariffs will be subject to the same discounts. Those clients on such ‘out of contract’ tariffs will continue to pay high prices over the winter. The amount of maximum discount is likely to be around 40.5p kWh for electricity and 11.5p per kWh for gas. The price you will pay and the discount you will receive, when not in contract, is going to vary on market conditions. Do expect, as we go into the Winter months for your supplier to amend your rates.
Importantly, customers won’t need to apply for any of the above discounts, it will be automatically applied.
If you have specific questions, not answered by the above, please get in touch and we can connect you with the team at Utilitrack.