UK Government’s new Energy Bill Discount Scheme – what you need to know!

This week, the UK Government has announced that businesses and other commercial organisations will continue to receive support for their energy bills from April 2023.

However, the levels of support 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.

The Government believes this will help businesses locked into contracts signed before recent substantial falls in the wholesale price manage their costs and provide others with reassurance against the risk of prices rising again.

BEIS / UK Government

The key points are: 

  • The new Scheme will provide a discount on high energy costs to give businesses certainty while limiting taxpayers’ exposure to volatile energy markets
  • Businesses in sectors with particularly high levels of energy use and trade intensity will receive a higher level of support.

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 support?

As with the original scheme, the new EBDS 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

Levels of support

For eligible non-domestic customers who have a contract with a licensed energy supplier, the government is announcing the following support:

  • From 1 April 2023 to 31 March 2024, all eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill.
  • This will be subject to a wholesale price threshold, set with reference to the support provided for domestic consumers, of £107/MWh for gas and £302/MWh for electricity. This means that businesses experiencing energy costs below this level will not receive support.
  • Customers do not need to apply for their discount. As with the current scheme, suppliers will automatically apply reductions to the bills of all eligible non-domestic customers.

Click for full details of the Government’s new Energy Bill Discount Scheme.

For any energy managers or real estates professionals concerned about managing energy challenges across their commercial or public buildings are welcome to seek advice from our team, or talk to our UK network of Priva Partners.

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