The energy price schemes

The energy price schemes
The Government have announced two separate schemes aimed at limiting the impact of soaring gas and electricity prices.

The domestic energy scheme

The Prime Minister set out a range of measures on 8 September to protect domestic consumers from the £3,549 Ofgem utility price cap originally due to take effect for three months from 1 October:

  • The key element was the EPG, superseding the Ofgem cap, set at an annual rate of £2,500 for two years from 1 October 2022. This will apply on the same basis as the Ofgem cap, i.e. a set of limits on standing and unit charges (see below) not on total bills:

    EPG charges for direct debit customers
    Standing charge per day: 28.0 Unit charge pr kWh: 10.3
    Standing charge per day: 46.0 Unit charge pr kWh: 34.0

  • Customers with existing fixed-rate tariffs above the EPG level will generally see their standing and unit charges brought in line with the EPG, subject to a maximum subsidy of 17p/kWh for electricity and 4.2p/kWh for gas.

  • The £400 flat-rate payment spread over six months announced in May will remain in place. The effect of this is to reduce bills by:
    £66 a month between October and December 2022; and
    £67 a month between January and March 2023.

  • The other financial assistance announced in May, such as the £300 additional payment for pensioners, will also remain in place.

  • There will be discretionary payments of £100 for those households using heating oil and liquefied petroleum gas (LPG).

  • The same level of support will be given to households in Northern Ireland that are not subject to the Ofgem price cap.

The non-domestic energy scheme

On 21 September, the Department for Business, Energy and Industrial Strategy (BEIS) revealed details of its Energy Bill Relief Scheme (EBRS) for businesses, public bodies, charities and other non-domestic energy users.

The scheme applies to non-domestic customers who are:

  • on existing fixed price contracts that were agreed on or after 1 April 2022;
  • signing new fixed price contracts;
  • on demand / out of contract or variable tariffs; or
  • on flexible purchase or similar contracts.

The EBRS will operate by reducing the estimated wholesale element of unit prices to Government supported price levels, subject to a maximum discount per unit.

Support level unit charge per kWh
Gas: 7.5: Electricity: 21.1

Maximum discount per kWh
Gas: 11.5: Electricity: 40.5

For comparison, the BEIS estimates that the wholesale costs in England, Scotland and Wales for this winter are currently expected to be around 60p/kWh for electricity and 18p/kWh for gas.

Further details about the EBRS include:

  • The EBRS support will apply for all eligible non-domestic customers for six months from 1 October 2022.
  • The Government will publish a review in three months’ time focused on ‘the most vulnerable non-domestic customers’. This will form the basis for decisions about ongoing support after the EBRS ends. Equivalent support to the EBRS will be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas.
  • A parallel scheme to the EBRS, based on the same criteria and offering comparable support, will be established in Northern Ireland.

If you would like any further information, please do not hesitate to contact us.