Energy Bill Discount Scheme
In April 2023, the automatic protection offered by the Energy Bill Relief Scheme (EBRS) ended. The new support scheme that applies until April 2024 is the Energy Bill Discount Scheme (EBDS). Although similar sounding to the old scheme, there are big differences.
In summary, the Energy Bill Discount Scheme is significantly less generous than its predecessor, and many businesses may not get any discount at all.
This article explores everything business owners need to know about the latest government support for business energy bills.
- What’s the Energy Bill Discount Scheme (EBDS)?
- What’s changing in the government support for business energy?
- Why most companies don’t benefit from the Energy Bill Discount Scheme
- Key details of the Energy Bills Discount Scheme
- Do businesses get help with energy bills?
- Energy Bill Discount Scheme – FAQs
What’s the Energy Bill Discount Scheme (EBDS)?
It’s a government scheme that applies a baseline automatic discount on energy bills (both electricity & gas) for eligible non-domestic customers in Great Britain and Northern Ireland.
The discount is applied on a per-unit basis during the 12-month period from April 2023 to March 2024, only if prices go above a certain threshold.
There are also two additional discounts that need applying for, one for “Energy and Trade Intensive Industries” and another for “heat networks with domestic end consumers”.
The scheme was established as part of the Energy Prices Act enacted in 2022 to combat the energy crisis of the same year.
What’s changing in the government support for business energy?
Before diving into the key details of the Energy Bill Discount Scheme, let’s explore the key difference between the new and old government business energy support schemes.
Here’s a graphical comparison of discounts offered by the two schemes:
The energy bill discount scheme is significantly less generous. In the example of a typical pub set out on the government website, a discount under the old scheme of £3,100 per month would be typical. Under the new scheme, that same pub will receive a discount of just £189 each month.
What’s more, this discount is a maximum figure; let’s explore why most businesses won’t benefit from any discount under the new scheme.
Why most companies don’t benefit from the Energy Bill Discount Scheme
The Energy Bill Discount Scheme only kicks in if the wholesale rates of electricity and gas exceed the following:
- 30.2p/kWh for electricity; or
- 10.7p/kWh for gas
Under this level, the scheme does not discount business energy bills.
An unseasonably warm winter has resulted in a significant fall in wholesale business energy prices. If your business has recently signed up for a new business energy tariff, the wholesale rates you’ll be paying are likely significantly lower than these thresholds.
The easing of wholesale energy costs is, of course, good news for businesses. There are significantly cheaper energy rates now on offer in the market. Get the latest quotes for your business with our business electricity comparison and business gas comparison tools.
Key details of the Energy Bills Discount Scheme
Here are the key details you need to know about the Energy Bills Discount Scheme:
Energy Bills Discount Scheme dates
The Energy Bill Discount Scheme will apply to bills in the 12 months from the 1st of April 2023 to 31 March 2024.
Energy Bills Discount Scheme eligibility
The Energy Bill Discount Scheme will apply to all non-household properties, including businesses, charities and other organisations and even small businesses’ electricity prices.
The one exception is fixed price energy tariffs agreed on before 1 December 2021 – but this is a moot point because the energy prices back then were significantly cheaper. You’ve been very lucky if you still have a fixed energy contract from before 2022.
Discounts available under the Energy Bill Discount Scheme
You’ll only receive a discount under the scheme if the wholesale element of your current energy tariff exceeds:
- 30.20p/kWh of electricity
- 10.7p/kWh of gas
You’ll receive a discount for any cost greater than these thresholds, up to a maximum discount of:
- 1.961p/kWh of electricity
- 0.697p/kWh of gas
It’s worth remembering that the wholesale charge is only one component of your energy bill; here’s a helpful guide to the different components of a business gas bill.
How do you apply for the Energy Bill Discount Scheme?
You don’t; the Energy Bill Discount Scheme is automatic. Your business electricity supplier/business gas supplier will automatically calculate and apply the discount to your electricity and gas bills.
Comparing business energy with the discount scheme
The Energy Bill Discount Scheme applies automatically regardless of your current business energy supplier or current electricity and gas tariffs.
Unlike its predecessor, the Energy Bill Discount Scheme will only provide a small discount to businesses. It’s really important to ensure your company is signed up for a competitive deal with your business energy supplier.
Use our business energy comparison service to get quotes tailored to your business today.
Do businesses get help with energy bills?
The government supports businesses through the Energy Bill Discount Scheme for 12 months until March 2024. The scheme automatically discounts business energy bills for companies on the most expensive fixed-rate energy tariffs.
Under the scheme, business energy suppliers will automatically deduct a discount from commercial energy bills. The discount applies where the wholesale element of bills exceeds 30.2p/kWh for electricity and 10.7p/kWh for gas.
Read on for an explanation of how the energy bill discount is calculated and other key details of the Energy Bill Discount Scheme.
Energy Bill Discount Scheme – FAQs
How much will the Energy Bill Discount Scheme cost?
The Energy Bill Discount Scheme has been specifically designed to be much cheaper for the government.
According to a government announcement on 9 January 2023, the scheme balances supporting businesses and limiting the taxpayer’s exposure to volatile energy markets. The scheme is estimated to cost £5.5bn, significantly cheaper than the £18bn spent on the more generous Energy Bill Discount Scheme.
Does the energy price cap apply to businesses?
No, the regulator Ofgem enforces an energy price cap on all household energy suppliers.
There is no equivalent business energy price cap in the commercial energy market.
Does the Energy Price Guarantee apply to businesses?
No, the Energy Price Guarantee applies only to electricity and gas supplied to homes.
The Energy Bill Discount Scheme and the Energy Bill Relief Scheme apply to any property that isn’t a home.