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Nursery Fees & Free Early Education Entitlement

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Our nursery offers the free 15hrs education entitlement for over 3's but at a rate of £3.50p/h so a total of £166 per month yet our current fees are calculated at a much higher rate than that.
Current fees are £46 for 10.5hrs = £4.38/hr

Is this £3.50 set by the government?

Also they state "From the term after a child’s 3rd birthday, our fee structure changes so that the first 15 hours per week over 38 weeks are charged at £3.50 per hour and any additional hours are charged at a higher average rate so that the total cost of the booking is as per our fee schedule above."

Doe this mean that they will charge me more for my sons extra hours to make up for any monies lost by the lower £3.50 hourly rate?

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