The government has announced details of a new energy bill relief scheme, which will cut gas and electricity prices for many schools this winter.
The scheme, first revealed two weeks ago, will apply to fixed contracts agreed from 1 April 2022, as well as to deemed, variable and flexible tariffs, and will discount energy usage from 1 October 2022 to 31 March 2023.
The exact price reduction that schools will see will vary depending on the contract they currently have, but the government has what it calls a “supported wholesale price”, which is less than half the wholesale prices anticipated this winter.
The supported price is expected to be £211 per mWh for electricity and £75 per mWh for gas, though the exact figure will be confirmed on 30 September.
What if my school is on a fixed-price deal?
Schools that have fixed-price contracts will be eligible for support as long as the contract was agreed on or after 1 April 2022 and the wholesale element of the price they are paying is above the “supported price”.
Their per-unit energy costs will automatically be reduced by the relevant p/kWh until 31 March, so they won’t need to do anything to get the discount, it will be reflected in October’s bills, which are usually seen in November.
As an example, the government says a school that uses 10 mWh of electricity and 22 mWh of gas a month, and signed a fixed contract in July 2022, may have a monthly energy bill of about £10,000 at the moment.
It says a school of this profile would reduce their original bill by around 40 per cent under the new scheme.
What if I enter a new contract after 1 October?
If your school enters a new fixed-price contract after 1 October, it will receive the same support as above.
It’s still important to sign the best deal possible, though, because after 31 March, the price will revert to the deal agreed, unless the government announces further support.
What if my school is on a default, deemed or variable tariff?
Those on default, deemed or variable tariffs will receive a per-unit discount on energy costs, with this discount being the maximum of the difference between the “supported” price and the average expected wholesale price over the period from 1 October to 31 March.
The government has said the amount of this discount is likely to be around £405/mWh for electricity and £115/mWh for gas, subject to wholesale market developments.
The reduction on bills will therefore change over time and may still be subject to price increases.
The government has said it is working with suppliers to ensure business customers, including schools, are given the opportunity to switch to a fixed contract for the duration of the scheme if they wish, which means they would be able to get the same discount as those already on fixed tariffs.
What happens after 31 March?
The government has said the scheme will run for an initial six-month period, meaning support will end after 31 March.
However, it has also said that it will publish a review into the operation of the scheme in three months to “inform decisions on future support after March 2023”.
It has said that the review will focus in particular on “identifying the most vulnerable non-domestic customers and how the government will continue assisting them” with energy costs.
‘Glaring problem’ with time-limited scheme
Geoff Barton, general secretary of the Association of School and College Leaders, said he was pleased to see the announcement, and that it was “essential”, as schools were facing “absolutely massive hikes in energy costs, which were simply unaffordable and would have caused an immediate financial meltdown in the sector”.
“We will now be looking at the scheme in detail and asking for feedback from school and college leaders,” he added.
“The glaring problem is the fact that the scheme is time limited to six months. The government says it will review the operation of the scheme in three months’ time to inform decisions on future support after March 2023.
“However, this uncertainty makes it impossible for schools and colleges to plan financially with any degree of confidence because they could be knocked off course at a later date by steep rises to energy bills if government support drops off.”
