SMEs missing out on energy support scheme

The TBESS application process has scared off many of the businesses it was designed to help, says Billy MacInnes

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It looks increasingly likely that the Temporary Business Energy Support Scheme (TBESS), the government’s recipe to provide financial support to businesses struggling to meet the exorbitant increase in energy costs since the invasion of Ukraine last year, is going to be extended for another two months.

A slew of stories in the Irish press on 14 May signalled that Minister for Finance Michael McGrath was expected to ask the cabinet to approve a proposal to extend the scheme, which allows businesses to claim for 50% of their energy bill increases, from the end of this month to the end of July.

McGrath told RTE: “I think extending the scheme, combined with the improvements to the scheme… will be of major benefit to businesses, many of whom are small and medium-sized enterprises who are grappling with very high energy costs.”

One of the problems for the government appears to be that many businesses haven’t taken advantage of the TBESS benefit. According to a report in the Irish Times on 17 April, the government had broadened the criteria for the scheme because only a fraction of the €1.25 billion it set aside for TBESS had been used. As of 13 April, the 34,227 claims approved accounted for a total value of only €74.9 million.

Even the best expectation manager would struggle to convince anyone that figure represented a success for the scheme.

At the consumer level, on the other hand, the government’s support scheme has been implemented very successfully, probably because the process has been automatic with no requirement to apply to get the €200 credits.

By contrast, the government has had to make several amendments to TBESS, such as increasing the monthly limit on payments, reducing the threshold for energy costs from 50% to 30% and increasing the payment amount from 40% to 50%.

Those reforms were welcomed by Ibec in February by executive director of lobbying & influence Fergal O’Brien who said: “The previous eligibility criteria and support levels were too restrictive, leading to poor take up from industry despite there being an ongoing energy affordability crisis”.

He claimed support levels had been below those in other European countries, leaving many businesses at a competitive disadvantage.

SFA director David Broderick said the reduction of entry levels for TBESS would allow more businesses to apply and help with cashflow “at a time where our smallest employers continue to face cost challenges in every area of business be it labour, transport, insurance, banking and utility costs”.

He hoped the disappointing number of applications would improve and the new entry level, allied to a more simplified application process would “safeguard small firms most affected by rising energy costs”.

No one is disputing the benefit of receiving a rebate from the government to mitigate the big rise in energy costs, but the extra bureaucracy connected with the process of claiming a payment appears to have deterred many businesses – or at least caused them to put it off to another day.

Cost of doing business

It is indisputable that companies have been negatively affected by rising energy costs – and channel partners are no exception to that rule. In fact, for some, such as MSPs, increased energy costs could have a disproportionate effect on their business costs and put additional pressure on them to take the hit or raise prices.

The lack of take up for the scheme brings us to the question of whether an automatic flat rate payment for every company, irrespective of size or consumption, might have worked better. The arguments against, that some companies might be disproportionately paid more or less than their energy use would justify, could be applied to payments made to home users but they didn’t stop it from happening.

Of course, at the business level, a flat rate payment would benefit smaller companies more than larger enterprises because it would have a greater effect on their ability to pay energy bills. You may recall that the argument for a more targeted approach and against a universal payment at the home account level was that wealthier individuals didn’t necessarily need the money. At the business level, it would probably be very different, with many arguing the amount wouldn’t provide enough compensation for the bigger companies.

That may be true but the difference in adoption levels between the scheme for businesses and the one for home users shows that sometimes it’s easier to make a payment automatic rather than force people to claim it.

In the meantime, for those of you who haven’t had the time, inclination or energy to claim the payment, you can find details on how to do so here. It might be a hassle but it’s got to be worth it.

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