Updates to the governments’ support scheme offering discounts on business energy
The UK government recently announced its Energy Bills Discount Scheme, which is set to replace the Energy Bill Relief Scheme currently in place to support businesses with rising energy costs. The new scheme will come into effect from the April 2023, and is set to run until April 2024.
Who Is Eligible For the Energy Bills Discount Scheme?
As with the Energy Bill Relief Scheme, the government’s new business energy discount will be available to everyone on a non-domestic energy contract including:
- Micro, small and large businesses
- Voluntary sector organisations, e.g. charities
- Public sector organisations e.g. schools, hospitals, and care homes
- On existing fixed price contracts agreed on or after 1st 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)
What Discount Will My Business Get on Energy Bills?
As per the current scheme, the government will provide a discount on your gas and electricity unit prices. Non-domestic businesses who are eligible for the scheme, will now receive a per-unit discount to their energy bills, throughout the 12-month period from April 2023 to March 2024. The relative discount will be applied only if wholesale prices are above a set price threshold and will be subject to a maximum discount. For most non-domestic energy users in the UK and Northern Ireland, these maximum discounts have been set at:
Electricity – £19.61 per megawatt hour (MWh) with a price threshold of £302 per MWh.
Gas – £6.97 per MWh with a price threshold of £107 per MWh
The discount is calculated as the difference between the wholesale price associated with a business’s energy contract and the government’s price threshold. The discount is applied when the contract’s wholesale price exceeds the floor price, until the total discount per MWh reaches the maximum discount for that particular fuel.
Example: A 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.
Example: A Small Retail Store
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.
How Do I Apply the Business Energy Bills Discount?
In the same way the current Energy Bill Relief Scheme is applied to your bills, the full government discount will be applied automatically for eligible customers from April 2023. You will see this line on the second page of your bill, replacing the Energy Bill Relief Scheme, under your Charge Details – Additional Charges. Your discount will be worked out in accordance with the governments pricing matrix detailed above. If you do not see a credit applied to your bill, please check your contract start date as contracts agreed before the 1st of December 2021 are unfortunately not eligible for the government discount.
Energy and Trade Intensive Industries Scheme
Certain business energy consumers are particularly vulnerable to high energy prices due to their energy intensive and trade exposure (often referred to as Energy and Trade Intensive Industries or ETIIs). Recognising this, the Energy Bill Discount Scheme will provide a higher level of support to these businesses, subject to a maximum discount. Organisations will receive a discount reflecting the difference between the price threshold and the relevant wholesale price. The thresholds for the ETII are set at:
- Electricity – £185 per MWh
- Gas – £99 per MWh
The discount will only be applied to 70% of energy volumes, and will be subject to a ‘maximum discount’ of £40.0 per MWh for gas and £89 per MWh for electricity. The baseline level of support offered under the Energy Bills Discount Scheme, will apply for the remaining 30% of energy volumes (where the wholesale price meets the baseline eligibility criteria).
If you are eligible for the higher discount provided by the Energy and Trade Intensive Industries Scheme, you will need to register to get this support.
Energy Bills Discount Scheme: Heat Networks Support
Heat networks typically purchase energy to supply heat through commercial contracts. Under the EBDS, all eligible non-domestic heat networks will receive a baseline level of support. However, those serving domestic end consumers will be eligible for a higher level of support.
To be eligible for the higher level of support, heat networks must:
- Meet the EBDS Regulations’ definition of a heat network
- Be supplied with gas or electricity by a licensed supplier for heat generation
- Serve one or more domestic end consumers
The scheme’s goal is to reduce the retail energy prices paid by heat networks to a specific Minimum Supply Price for heat networks, without a maximum discount or wholesale price thresholds. This approach differs from other parts of the Energy Bill Discount Scheme or Energy Bill Relief Scheme.
The scheme supports the wholesale element of a heat network’s energy tariff, up to the point where the Minimum Supply Price is achieved.
The Minimum Supply Prices are set at:
- £340 per MWh for electricity
- £78.3 per MWh for gas.
Once approved, heat networks will receive the new discount rate from their energy suppliers and are responsible for passing the discount on to their domestic customers. This aims to ensure that customers on heat networks do not face significantly higher heat and hot water bills than equivalent households supported by the Energy Price Guarantee (EPG).
If domestic customers think they have not been passed on their discounts in a just and reasonable way, and have been unable to resolve complaints about discounts directly with their heat network, they can access alternative dispute resolution through the Energy Ombudsman (for Great Britain) and the Consumer Council for Northern Ireland (for Northern Ireland).
Organisations must provide information about their energy supplier, relevant energy supply contract(s) references, and applicable meter point references to be eligible for the scheme. Eligible organisations have 90 days from the scheme opening to apply for higher support. The government will determine eligibility based on the details provided during registration, and in some instances, further validation may be required. The government will use a range of data sources, including Companies House data and eligibility for other support schemes to make the initial determination.
Energy suppliers cannot apply the discount rate until the Department for Energy Security and Net Zero confirms eligibility.
Businesses need to register to get this support.
You do not need to do anything to receive the Energy Bills Discount Scheme, we will automatically calculate and apply the discount for all eligible customers. If you have any further questions about the scheme or about your bill, please contact our customer services team.
If you would like to take out a new contract, you can get a quote in just a few short steps, with our online tool or contact form. Get your business energy quote now.