Customers on Flexible Contracts

Customers on flexible contracts

Am I eligible for EBRS?

• Your eligibility status will be determined on a monthly basis, depending on whether your weighted average price is above the government supported price.
• There’s no need to do anything to opt into the scheme. We’ll be in touch to confirm your eligibility, your level of discount and how it will be applied.

How will the discount be calculated?

• If your contract is eligible for a discount it will be paid on the wholesale energy element (only) of your contract price. The wholesale element will be a blended rate for the energy consumed each month and will reflect each fix and unfix and the associated volumes covering that period, calculating a Weighted Average Price.
• This will take into account all fixes and unfixes, including those made prior to the scheme and any gains made in unfixing volumes will be reflected in a lower Weighted Average Price.
• The Weighted Average price will not include any fees relating to trading charges, volume tolerance breaches, premiums for shape/imbalance or any other similar charges.
• The Weighted Average Price will be compared to the government supported price (currently 7.5p/Kwh in gas and 21.1p/Kwh in electricity) with the difference between the two being the level of discount provided. However, the level of discount is capped at 9.1p/Kwh for gas and 34.5p per Kwh for electricity. (Please note these figures won’t be finalised until legislation is passed)

Illustrative example

• An electricity customer has a Weighted Average Price of 52p/Kwh for October. The difference to the government supported price is 30.9/Kwh. So, this is the level of discount for October.
• This is applied at the Meter Point Level (MSP) for that billing period to calculate the £ amount the consumption should be reduced by.

Government guidance on customer and supplier behaviour

The government has made it clear that customers should continue to manage their contracts and hedges in the same way they would have done had the scheme not been in place and should not make any changes to intentionally manipulate the levels of government support received.

The legislation to enact EBRS is expected to include anti-abuse clauses to prevent suppliers and end customers additionally benefitting from the scheme to artificially increase the levels of support given. Doing so may affect a customer’s eligibility for the scheme.
 

Other clarifications

• Where a customer is billed on a reference price or flattened customer prices (based on already executed trades) the Weighted Average Price calculation should be based on the underlying trades for each billing period and not the agreed billing price.
• Customers with physically sleeved Corporate Power Purchase Agreements (CPPAs) will have these included as part of their Weighted Average Price calculation (including sleeving fees related to converting the CPPA shape to baseload)
• Customers with related financial instruments in place to manage risks outside of physical hedges (e.g. CPPAs, financial derivatives, weather hedges etc) will be expected to be required to declare these and will have support adjusted to reflect the impact in the Weighted Average Price of these products.

What is the Energy Bill Relief Scheme (EBRS)?

• The EBRS has been designed to provide non-domestic energy users worst affected by the high energy prices with much-needed help with their energy bills over winter 2022/2023.
• The scheme will run from 1^st October 2022 – 31^st March 2023 across Great Britain, and the government will provide a discount on energy bills over this period.
• More information on the scheme can be found in the government’s press release (https://www.gov.uk/government/news/government-outlines-plans-to-help-cut-energy-bills-for-businesses) and explainer document (Energy Bill Relief Scheme: help for businesses and other non-domestic customers - GOV.UK (www.gov.uk))
• Customers do not need to take any action and the discount will be automatically applied for eligible customers.

How much will the discount be?

• The level of price reduction for each business will vary depending on your contract type and circumstances and is determined by the government. See below for more details.
• We’re letting eligible customers know that they are eligible and the level of discount they can expect.

Who is eligible for the EBRS?

• The EBRS will be available to non-domestic customers including businesses, voluntary sector (e.g. charities), public sector organisations (e.g. hospitals and schools) who:
• Agreed a fixed price contract on or after 1^st December 2021 that is above the government supported price. Fixed contracts agreed before this date will not be eligible.
• Are on tariff/deemed/out of contract rates
• Are on flexible purchase (or similar) contracts - eligibility and the level of discount will be calculated according to the specifics of each contract

Exclusions: There may be very limited exclusions to eligibility, for example businesses that use gas or electricity for the purpose of generating power they are selling back into the grid, such as power stations, pumped hydro or grid-level battery storage.

Do I need to change my product or buying behaviour?

• We will be encouraging those customers on a variable or deemed contract to fix their price with us.
• We will not be offering a 6-month fixed price contract to those customers on a flexible contract (excluding microbusiness customers on deemed rates).
• Normal buying behaviour must continue. As stated in government guidance, ‘non-domestic suppliers and consumers must not profit from the scheme other than for its intended purpose of providing relief on necessary energy bills. Any such activity will result in support being refundable to government and may be liable to further penalties’.

Are green levies included in the discount?

• Non-domestic customers bills will still show green levies being charged, but in all cases those who get this charge will be covered by the EBRS discount for eligible energy use.