Government publishes plans to discount charities’ energy bills from October

21 Sep 2022 News

by Glebovic / Adobe

The government has published further details of its scheme to reduce energy bills for charities, businesses and public sector organisations from next month.

A discount will automatically be applied to charities’ energy bills from 1 October to 31 March, meaning voluntary organisations do not need to apply to access the support.

To administer support, the government has announced a supported wholesale price of £211 per MWh for electric and £75 for gas, which it said is less than half the wholesale prices previously anticipated this winter.

The government will publish a review into the operation of the scheme in three months to identify how it can continue to support the most vulnerable non-domestic customers after March 2023.

Sector figures said the government’s intervention would provide important relief for thousands of charities but urged further long-term support.

Automatic reduction on energy bills

Charities on fixed price contracts agreed on or after 1 April 2022 will see their per unit energy costs automatically reduced by the relevant p/kWh, so long as they exceed the supported wholesale prices.

Those on default, deemed or variable tariffs will also receive support through a per-unit discount on energy costs, up to a maximum of around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market developments.

For organisations on flexible purchase contracts, typically some of the largest energy-using businesses, suppliers will calculate a reduction according to the specifics of that company’s contract and subject to the maximum discount.

The government is working with suppliers to ensure all organisations in England, Scotland and Wales are given the opportunity to switch to a fixed contract/tariff for the duration of the scheme if they wish.

It will also announce details on further support for organisations who use heating oil or alternative fuels instead of gas shortly.

A parallel scheme, based on the same criteria and offering comparable support, but recognising the different market fundamentals, will be established in Northern Ireland.

PM: ‘I understand pressure on charities’

Prime minister Liz Truss said: “I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs and livelihoods.

“As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind.”

Business secretary Jacob Rees-Mogg said: “The help we are already putting in place will save families money off their bills, and the government’s plans for businesses, charities and public sector organisations will give them the equivalent level of support.

“This, alongside the measures we are taking to boost the amount of domestic energy we produce to improve both energy security and supply, will increase growth, protect jobs and support families with their cost of living this winter.”

CFG: ‘Longer-term support needed’

Dr Clare Mills, Charity Finance Group’s director of policy and communications, said: the scheme was a “welcome and sensible proposal".

“However, it is short-term relief against further price increases. Both Liz Truss and Jacob Rees-Mogg explicitly refer to charities and it’s positive that they recognise the role the charity sector plays in supporting growth and providing jobs. But we need to get in front of this crisis. Charities can’t afford to wait for three months to find out if they will have further help in the spring. They need to be able to plan ahead," she said.

“We’ll be working with other charity infrastructure organisations and talking to BEIS about the vital work charities do, meeting needs that would otherwise fall on public services. We’ll be asking for urgent clarity and longer-term support for the sector, particularly for those organisations with energy-intensive operations. Whether running a play centre, residential home for the elderly or supported living for people with disabilities, charities should not have to abandon their people or turn off the heating."

PBE: ‘Indispensable’ support for charities

Nicole Sykes, director of policy and communications at Pro Bono Economics, said: “This government support is indispensable for thousands of charities and community groups around the UK that were concerned they might simply sink under the weight of crushing energy bills without it.

“The pressures on these organisations are particularly acute given the unique strain placed on the social sector by the cost-of-living crisis. As demand for charity support rockets as a result of the economic hardship faced by millions, inflation is eroding the finances of charities every day.

“This is why the whole economy approach to this crisis taken by the government today is so important. It ensures that the kind of organisations that can slip through the cracks, such as community centres and refuges, are protected and can continue to do their vital work, especially at a time of such considerable need.

“It is now crucial that the experience of civil society is fed into the government’s vulnerable sector review in three months’ time, to prevent support slipping away where it is needed the most.”

SEUK: ‘Discount must be delivered quickly’

Peter Holbrook, Chief Executive of Social Enterprise UK said: “This vital intervention from government will give social enterprises some of the help that they need this winter.

“The cap will help our sector to protect jobs and investment in local communities, ensuring that they can continue to deliver their social and environmental missions.

“We now need the energy companies to deliver this discount quickly. Any delay could harm the cashflow of social enterprises and create needless distress.

“However, this crisis is not going to go away. Businesses need more certainty to plan and to secure investment for growth, which is why it’s crucial that the government swiftly clarifies what will happen beyond March next year. Until the energy crisis is resolved, the cap must be kept.”

NCVO: ‘We still face a challenging winter’

Alex Farrow, director of influencing and engagement at NCVO, said: "We welcome the government's support and are relieved that charities and community organisations are included from the beginning. Today's announcement provides some much needed clarity and we call on the government to implement the package as quickly as possible.

"Many organisations are dependent on high energy use to deliver their work - places like community centres, swimming pools and hospices. We want to work with the government to ensure that charities’ energy costs are sustainable long term and so that they can keep delivering for communities.
"Charities’ resilience is being tested, especially alongside fewer donations, higher costs and rising demand. The energy package for communities and charities will be a relief to many, but we still face a very challenging winter."

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