The Government has announced that businesses and other commercial organisations will continue to receive support for their energy bills from April 2023 - but it will be at a lower level than they currently get under the Energy Bill Relief Scheme.
The Energy Bill Discount Scheme will replace the current scheme and will come into effect from April 1, 2023 and will run until 31 March, 2024.
What is the Energy Bill Discount Scheme?
The Energy Bill Discount Scheme (EBDS) replaces the Energy Bill Relief Scheme which currently provides a discount on wholesale gas and electricity prices for all non-domestic consumers. This includes public sector organisations, voluntary sector organisations like charities, and businesses.
It was designed as a temporary six-month measure to protect non-domestic consumers from soaring energy costs, cutting the cost of energy bills.
The new scheme will have a cap set at £5.5 billion, based on estimated volumes, and will run for 12 months.
The new scheme is different in that firms will get a discount on wholesale prices rather than costs being capped as under the current one.
Who will get it?
As with the original scheme, the new scheme will be available to everyone on a non-domestic contract including:
- businesses
- voluntary sector organisations, such as charities
- public sector organisations such as schools, hospitals, and care homes
who are:
- on existing fixed price contracts that were agreed on or after 1 December 2021
- signing new fixed price contracts
- on deemed / out of contract or standard variable tariffs
- on flexible purchase or similar contracts
- · on variable ‘Day Ahead Index’ (DAI) tariffs (Northern Ireland scheme only)
How much help will I get?
The Government will apply a discount on your gas and electricity unit prices.
Eligible non-domestic consumers will receive a per-unit discount to their energy bills during the 12-month period from April 2023 to March 2024, subject to a maximum discount.
The relative discount will be applied if wholesale prices are above a certain price threshold.
For most non-domestic energy users in Great Britain and Northern Ireland these maximum discounts have been set at:
- electricity - discounts of up to £19.61 per megawatt hour (MWh) when the wholesale prices are above £302 per MWh.
- gas -discounts of up to £6.97 per MWh when the wholesale prices are above £107 per MWh
If wholesale prices stay below the threshold, the discount is not applied.
Under the original Energy Bill Relief Scheme, electricity prices were capped at £211 per megawatt hour (MWh) / 21.1p per kilowatt hour (KWh) and for gas - £75 per MWh / 7.5p per KWh
How do I get the discount?
As with the original scheme, suppliers will automatically apply reductions to bills.
The government will then compensate suppliers for the reduction in wholesale gas and electricity unit prices that they are passing on to non-domestic customers.
Example of a typical pub
A typical pub uses 16 MWh of gas and 4 MWh of electricity each month. Under the new scheme, it could receive up to £2,280 of taxpayer funded support in the 23/24 financial year.
A small shop
A typical small retail store uses 2 MWh of gas and 1 MWh of electricity each month. Under the new scheme, it could receive up to £403 of taxpayer funded support in the 23/24 financial year.
A medium - sized manufacturer
A medium sized manufacturer uses 1,600 MWh of gas and 200 MWh of electricity each month. Under the new ETII scheme, it could receive up to £687,120 of taxpayer funded support in the 23/24 financial year.
Extra support available for energy intensive users
Some businesses that can be classed as Energy and Trade Intensive Industries (ETIIs) will receive a higher level of support, subject to a maximum discount. The maximum discounts and price threshold for these sectors are:
- electricity - £89 per MWh with a price threshold of £185 per MWh
- gas - £40 per MWh with a price threshold of £99 per MWh
For a full list of businesses see this Government document.
Eligible ETII customers will have to apply for the higher level of support. The Government said that further details on how this will work will be published in due course.
EBRS legislation, rules and guidance
The Energy Prices Act 2022 provided government with the powers to establish the EBRS, ensure scheme benefits are passed on to consumers, and provide for an effective compliance and enforcement regime. The Energy Bills Discount Scheme will be set out in regulations made under these powers.
