The Energy Bills Relief Scheme, which was launched by the government to help businesses manage rising energy costs will come to an end on 31st March 2023.
It is essential to remember that this scheme is not a price cap like the support provided to domestic energy users. Therefore, when the Energy Bills Relief Scheme expires, businesses may experience an increase in their energy bills. The government has announced that the Energy Bills Discount Scheme will replace the Energy Bills Relief Scheme, running until 31st March 2024. However, this new scheme is not as generous as its predecessor, and businesses may still face higher energy bills after the current scheme’s expiration.
So, is there anything your business can do to prepare for prices going back up?
Let’s take a look.
How can I prepare my business for the end of the scheme?
It’s important to highlight potential challenges that businesses could face when the Energy Bills Relief Scheme ends. There is no guarantee that the energy market will stabilise in the coming next 12 months or that energy prices will remain steady, as they currently are.
As a result, businesses may see their energy bills increase further, this is particularly true for those who secured a fixed-term contract in 2022, during the energy crisis after EBRS support is removed.
Although the Government has announced further support through the Energy Bills Discount Scheme, it has reduced funding from approximately £18.5 billion for six months (the Energy Bill Relief Scheme) to £5 billion for 12 months (the Energy Bills Discount Scheme) starting from April 1, 2023. This means that there will be less financial support available, and businesses may still face higher energy bills even with the discount applied. You can find out details of exactly what EDBS support is available and what it means for your business here.
To prepare for the end of the scheme, businesses need to take proactive steps, even though it is being replaced. First, it is crucial to note when the current fixed-rate deal ends and ensure that the business is as energy-efficient as possible.
Variable, Out of Contract and Deemed Rates
For businesses on a variable rate contract, it is worth comparing fixed deals to lock in lower rates. Variable contracts can be unpredictable, and businesses on deemed or out-of-contract rates are likely to pay higher energy bills as suppliers charge higher rates for businesses that are out of contract.
Fixed Contracts
For businesses on a fixed-rate deal that is ending in the next six months, it is advisable to agree on a new contract now. By comparing suppliers, businesses can weigh up whether to lock in their rates or and use our market intelligence to see where prices are heading, aligned with your budget and risk to market exposure.
Once businesses are clear about their contracts, it is important to ensure that you use the opportunity of time to mitigate market risk and exposure to movements. Many businesses still to this date leave their energy renewals to the last minute, in hope of a falling market that will save them from increases, the fact is, by using the opportunity of time and being proactive, you actually mitigate the 1 in a 365 day chance of gaining the best possible rate.
Once businesses are clear about their contracts, it is important to ensure that they are being billed correctly. If the supplier is estimating the bills, the business may be paying more than necessary. To check the accuracy of the bills, regular meter readings should be taken and sent to the supplier. Additionally, businesses can ask the supplier to take specific steps to keep their bills accurate, such as installing a smart meter. You can find out more about Smart Meters in our blog here.
How much impact has the EBRS had on my energy costs?
In comparison, the EBRS support has been extremely generous to customers who have received this Vs, the new support available from 1st April 2023, EBDS.
With wholesale rates now well below EBRS and EBDS eligibility, no new business energy contracts have or will receive support, this has been the case since 25th December 2022.
The graph above highlights how important EBRS has been to businesses.
With many customers still on fixed contracts that were secured during the height of the energy crisis in 2022, some who even signed long term fixed contracts – the coming months after EBRS support ends could be extremely difficult and there are calls to lobby Government to take last minute appropriate action.
What other support is available for small businesses?
As we approach the end of the UK government’s Energy Bill Relief Scheme, it’s important for businesses to explore all available options for financial support with rising energy costs. Once the scheme ends, energy bills will no longer be discounted as generously, so it’s worth considering your options now.
If you’re struggling to pay your energy bills, it’s recommended to contact your supplier as soon as possible to discuss your situation. They may be able to review your contract, offer a new payment plan, or provide access to hardship funds, payment breaks, or payment reviews.
In addition to contacting your supplier, it’s also worth exploring what government grants and subsidies your business may be eligible for. These can include funding for energy efficiency measures and the installation of renewable energy technologies.
Check out the Government website for more information on available grants and subsidies, and don’t forget to also look into funding opportunities from your local council. By taking advantage of all available options, you can help your business manage energy costs and promote sustainability.
What should I do if I want or need to sign a new energy contract soon?
Businesses on variable rates, including out-of-contract and deemed rates, could be paying more for their energy due to market volatility. While it’s impossible to predict future energy prices, comparing energy suppliers and fixing your rates can provide your business with some cost certainty and protection against price hikes. Our team of energy experts can guide you through your options and help you choose the best plan for your business.
If you secured an energy contract during the 2022 energy crisis and have been relying on the Energy Bill Relief Scheme, it’s likely that you’ll see a significant increase in costs as the scheme is replaced by the less generous Energy Bills Discount Scheme. Therefore, it’s essential to prepare early and avoid waiting until the last minute to renew your energy contract to secure the best rate.
How can UtilityWorks help your business?
As a business owner, dealing with the energy crisis can be overwhelming. However, UtilityWorks is here to help alleviate your stress by providing reliable information and comparing trusted suppliers on your behalf.
In addition to finding the best deals for your business gas and electricity supply contracts, we can assist in many other ways, giving you more time to focus on running your business.
With our services, you can save time, money, consumption and carbon.
