Businesses criticise design of energy support scheme amid limited uptake

Several problems with the scope, design, and eligibility criteria of a key Budget 2023 measure designed to help businesses cope with crippling energy costs have been blamed for its low uptake.

The Temporary Business Energy Support Scheme (TBESS) is under review in terms of whether it will be extended beyond the end of February or if the terms and conditions need to be changed.

The scheme was costed at €1.25 billion when it was announced in the budget but only a fraction of this has been used.

In a letter to Minister for Enterprise Simon Coveney in the past week, business lobby group Ibec said the reason for the low uptake to the scheme was down to “several problems” with the scheme’s scope, design, and eligibility criteria.

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It called on the Government to make a number of changes to the scheme, including an amendment to its reference period.

“In its current design, businesses must show that the average unit price of electricity or natural gas has increased by 50 per cent or more compared to the corresponding month 12 months prior,” it said. “As many businesses are billed quarterly or bi-monthly this presents some administrative challenges.

“However, the main challenge with the monthly reference period is that wholesale energy costs between late September and December 2021 were abnormally high as the European economy emerged from Covid-era restrictions.

“Consequently, many businesses simply cannot show a 50 per cent increase on that reference period, particularly for the first three monthly claim periods. The solution to this is the introduction of longer reference periods across 2021/2022.”

The group also said the Government should enable landlord participation. In its current design, the scheme operates by reference to bills or statements for the metered supply of electricity and natural gas through electricity accounts or gas connections identified by companies’ own meter points.

“Many small and medium-sized businesses … pay utility charges directly to their landlord or as part of their overall rent,” Ibec told Mr Coveney. “This is commonly seen in properties with multiple business tenants.

“Because landlords are ineligible, their tenants must still shoulder the energy cost element of their rent. In some cases, the landlord has yet to pass through these energy costs to their tenants and increases can be expected in the coming months.”

Furthermore, Ibec called for the removal of the current cap of €30,000 per corporate entity, which it said “continues to present challenges for several sectors with multiple sites”.

“We suggest that the hard cap of €30,000 in energy support per company is adjusted to take regard for threats to viability or reductions in activity or opening hours for businesses,” it said.

In addition, the business group said the window for applications should be extended, and that the scheme should be allowed to run until the end of the year.

It added that more work should also be done on helping businesses to understand the mechanics of the scheme, as well as on promotion of the scheme.

Ibec said a canvass of 384 firms across all core sectors suggested average business expenditure on gas increased by 90 per cent last year on 2021 levels.

It further suggested that average business expenditure on electricity increased by 60 per cent on 2021 levels, and that energy expenditure increased in 2022 for 57 per cent of respondents who reduced energy use.

Firms are forecasting gas costs to be three times higher in 2023 than 2021, while electricity costs are expected to be 2.5 times higher in 2023 than 2021. Seven out of 10 firms are forecasting reduced profitability for 2022 because of energy costs.