Energy Bill Discount Scheme

The government have recently announced a new support scheme for eligible non-domestic customers who have a contract with a licensed energy supplier. The Energy Bill Discount Scheme will replace the ongoing Energy Bill Relief Scheme, which expires on 31st March 2023. 
 

• The scheme will discount high energy costs to give businesses certainty while limiting taxpayers’ exposure to volatile energy markets.

• Businesses in sectors with particularly high energy use and trade intensity levels will receive higher support.

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What’s changed?

 

Scheme duration:

 

Energy Bill Relief Scheme (EBRS) – 1 ST October 2022 – 31st March 2023

Energy Bill Discount Scheme (EBDS) – 1 st April 2023 – 31st March 2024

 

Thresholds:

 

Under the new scheme, the threshold at which support will be available has increased significantly from 21.1p/pkwh to 30.2p/pkwh for electric and from 7.5p/pkwh to 10.7p/pkwh for gas. Support under the new scheme will only be applied where wholesale costs exceed the supported price of 30.2p/pkwh for electric and 10.7p/pkwh for gas.

 

At the time of writing, the published wholesale costs for last week were 17.25p/pkwh for electricity and 5.71p/pkwh for gas – considerably lower than the qualification threshold.

 

For eligible Energy and Trade Intensive Industries, the government is announcing the price threshold for the scheme will be 9.9p/pkwh for gas and 18.5p/pkwh for electricity.

 

Discounts:

 

Under the new Energy Bill Discount Scheme, the support is considerably less than the existing scheme where, at the wholesale market peak, discounts of up to 55.05p/pkwh for electricity and 17.64p/pkwh for gas* are being applied for energy consumed in fixed contracts between 1st October 2022 and 31st March 2023. Under the new EBDS, maximum discounts of up to 1.961p/pkwh for electricity and 0.697p/pkwh for gas will be applied for eligible non-domestic customers.

 

Discounts are dependent on the published wholesale commodity costs on the date the contract was agreed and for the first time under the Energy Bill Relief Scheme, on week commencing 26th December 2022, the published wholesale prices for gas and electricity was lower than the government supported price. Consequently, no relief was to be applied for contracts agreed that week under the terms of the EBRS scheme. At the time of writing, the published wholesale prices for gas and electricity remain lower than the government supported price.

 

For eligible Energy and Trade Intensive Industries, the government is announcing the discount will only apply to 70% of energy volumes and will be subject to a ‘maximum discount’ of 4p/pkwh for gas and 8.91p/pkwh for electricity. *Discount for contracts agreed between 23/08/22 – 28/08/22. Source 13.01.23

 

Summary:

 

Eligible non-domestic customers who have a contract with a licensed energy supplier.

 

EBDS discounts up to a maximum of 1.961p/pkwh if wholesale price exceeds 30.2p/pkwh for electricity.

 

EBDS discounts up to a maximum of 0.697p/pkwh if wholesale price exceeds 10.7p/pkwh for gas.

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*EBRS (current scheme) : Scheme duration 1 st October 2022 – 31st March 2023

Discounts : Up to 55.05p/pkwh (electricity); up to 17.64p/pkwh (gas)

Thresholds : 21.1p/pkwh (electricity); 7.5p/pkwh (gas)

Discount automatically applied? : Yes

 

*EBDS (future scheme) : 1 st April 2023 – 31st March 2024 (12 months)  Up to 1.961p/pkwh (electricity)

Discounts : Up to 0.697p/pkwh (gas)

Thresholds : 10.7p/pkwh (gas)

Discount automatically applied? : Yes

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*Under EBRS scheme, discounts have ranged from 0.00-55.05p/pkwh (electricity) and 0.00-17.64p/pkwh (gas). Discounts are based upon the wholesale market when the contract was agreed.

 

**The minimum wholesale cost at which support will be provided. If the published wholesale cost is below this threshold, support will not be provided.

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Examples

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The level of support for each organisation will vary depending on type and date of contract.

These are illustrative examples only, based on recent averages of forward wholesale prices. Prices may differ from those experienced in practice.

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Example 1: A pub

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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.

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Example 2: A small retail shop

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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.

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Example 3: A medium sized manufacturing business

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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.

 

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