On 9 January 2023, the government announced a successor to last year’s Energy Bills Relief Scheme (EBRS), which draws to a close on 31 March 2023, in the form of the Energy Bills Discount Scheme (EBDS).
The temporary scheme, set to finish at the end of March 2023 provides a discount on wholesale gas and electricity prices for all non-domestic customers including all UK-eligible businesses equivalent to the Energy Price Guarantee for domestic users. You can read an overview of the scheme here.
Following a three-month review into the operation of the EBRS, and in light of the wholesale cost of gas having halved since the introduction of the original EBRS, the government announced earlier this month a replacement business energy scheme with effect from 1 April 2023 through to 31 March 2024. The new scheme effectively reduces the value of government support from the current £18bn scheme to a cap set at £5.5bn.
The new scheme will be available to businesses, charities and public sector bodies who are:
Eligible non-domestic consumers will now receive a unit discount of up to £6.97/MWh on their gas bill and a unit discount of up to £19.61MWh on their electricity bill during the 12-month period from April 2023 to March 2024, above a threshold level of £107/MWh for gas and £302/MWh of electricity.
As with the previous iteration of the scheme, customers do not need to take action or apply to the scheme to access the support; support will automatically be applied to energy bills by suppliers.
If you think your supplier is not applying the discount correctly, you should contact them in the first instance.
The government will compensate suppliers for the reduction in wholesale gas and electricity unit prices that they are passing on to non-domestic customers.
The discount applied will be in pence per kilowatt hour (p/kWh). The p/kWh government support for comparable contracts will be the same across suppliers, but the absolute level of individual bills will continue to vary across different contracts and tariffs.
The government recognises that those in energy and trade-intensive industries (ETIIs) are less able to pass higher costs through to their customers, due to international competition. Therefore, a higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – a long-standing category primarily including manufacturing businesses.
As with the current scheme, the discount will reflect the difference between the government-supported price and the relevant wholesale price. This discount will only apply to 70% of energy volumes and will be subject to a ‘maximum discount’ of £40.0/MWh for gas and £89.1/MWh for electricity. The threshold price will be £99/MWh for gas and £185/MWh for electricity.
For a full list of sectors in scope, please click here.
Businesses may need to register to be eligible for this additional support. Details on how to apply will be released in due course.
For full details of the EBD, please click the link here.