What the new Energy Bill Discount Scheme means for your business

Last year the government launched ‘The Energy Bill Relief Scheme’, a temporary scheme designed to protect businesses from soaring energy costs, intended for a limited time to allow businesses time to adapt. As of 1st April 2023, the government replaced this scheme with the ‘Energy Bills Discount Scheme (EBDS)’ and pledged additional support for Energy and Trade Intensive Industries (ETII).

What is the Energy Bills Discount Scheme (EBDS)?

The scheme will run from 1st April 2023 – 31st March 2024 and will provide discounts on energy bills for eligible non-domestic customers in Great Britain, however financial support will be significantly less than the previous Energy Bill Relief Scheme. EBDS will offer a discount on the wholesale portion of your business’s gas and electricity unit rates (only if they are higher than the minimum threshold) rather than costs being capped.

The scheme is made up of three different parts:

1. The Baseline discount – provides some support with energy bills for eligible non-domestic customers
2. The Energy and Trade Intensive Industries (ETII) discount – provides a higher level of support to businesses who are eligible
3. The Heat Network discount – provides a higher level of support to heat networks with domestic end consumers

Who is eligible for the EBDS Baseline discount:

You don’t need to apply, like the previous scheme suppliers will automatically apply reductions, however, the new scheme support is considerably reduced compared to EBRS and the new scheme may take some businesses out of scope. EBDS is available to everyone on a non-domestic energy supply contract with a licenced energy supplier, including businesses, voluntary and public sector organisations 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 variable tariffs
• On flexible purchase or similar contracts
• Who is eligible for the additional Energy and Trade Intensive Industries (ETII) discount?
• Businesses will need to apply to receive this discount. This scheme is for businesses in sectors who have been identified by the government as being the most energy and trade intensive, see if your business qualifies as an Energy and Trade Intensive Industry (ETII) in scope of the additional support here 

If approved, eligible organisations will receive an energy cost discount reflecting the difference between the price threshold and the relevant wholesale price, the discount will apply to 70% of energy volumes.

Who is eligible for Heat Network discount scheme?

Businesses will need to apply to receive this discount.  The scheme will provide a higher level of support for businesses who run a heat network and supply to domestic customers.

Key differences in discounts between schemes:

EBRS (old scheme) - 1st October 2022 – 31st March 2023

• Elec – Supported Government price is £211 per MWH / 21.1p per KWH
• Gas – Supported Government price £75 per MWH / 7.5p per KW

EBDS (new scheme) - 1st April 2023 – 31st March 2024

• Elec – Supported Government price will be £302 per MWH / 30.2p per KWH (with a maximum discount payable of £19.61 per MWH / 1.96p per KWH)
• Gas – Supported Government price £107 per MWH / 10.7p per KWH (with a maximum discount payable of £6.97 per MWH / 0.697p per KWH)

What does this mean for your business

• The thresholds have changed, not every business who was previously eligible, will continue to be going forward. Although you don’t need to reapply, your business should check if it still qualifies for support.
• For businesses who still meet the new criteria, the new discount will be significantly less than the previous ‘cap’, therefore businesses will see a rise in their energy bills. See examples below:
• Electricity example: Client signed new electricity contract on 01/08/2022. On this date, wholesale cost was 55.83p per KWH. This has entitled the client to 34.73p per KWH. (55.83p–21.1p = 34.73p) From 1st April 2023, the client will be entitled to a maximum discount of 1.96p per KWH, as the original wholesale cost of the energy is still higher than the new Government supported price (30.2p per KWH)
• Gas example: Client signed new gas contract on 25/12/2022. On this date, wholesale cost was 8.34p per KWH. This has entitled the client to 0.84p per KWH. (8.34p–7.5p = 0.84p) From 1st April 2023, the client will not be entitled to any discount as the original wholesale cost of the energy is lower than the new Government supported price (10.7p per KWH)
• Businesses who are high energy users or run a heat network should apply for additional support.
• Businesses should look for alternative ways to reduce consumption and control costs.

Next steps

Businesses have 90 days from 26th April to register for the additional discount schemes, new organisations or newly eligible organisations will have 90 days to apply from the date they become eligible. 

Guidance on EBDS and how to apply for ETII and Heat Network discounts are detailed on the government website.

We can help

If you would like any advice on your energy bill or how the new energy bill support scheme might impact your business, our team are here to help. We offer impartial expert advice to help businesses control costs, consumption and emissions and achieve Net Zero goals.