The Government has announced a new Energy Bills Discount Scheme (EBDS) from April 2023 to April 2024 for eligible non-domestic consumers in Great Britain and Northern Ireland.
The current Energy Bill Relief Scheme announced in September comes to an end in March 2023. It supports businesses and public sector organisations such as schools and hospitals by providing a discount on wholesale gas and electricity prices.
Eligible non-domestic customers facing significantly inflated gas and electricity prices in light of global price pressures, triggered by Russia’s invasion of Ukraine, have benefitted from the discount since 1 October 2022.
On 17 October it was announced that an HM Treasury-led review of the scheme would determine support beyond March 2023.
The government has stated that current levels of support were time-limited and intended as a bridge to allow businesses to adapt. Wholesale gas prices have now fallen to levels just before Russia’s invasion of Ukraine and have almost halved since the current scheme was announced. The EBDS therefore attempts to strike a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion based on estimated volumes.
As per the current scheme the government will provide a discount on your gas and electricity unit prices. Eligible non-domestic consumers will now receive a per-unit discount to their energy bills during the 12-month period from April 2023 to March 2024, subject to a maximum discount. The relative discount will be applied if wholesale prices are above a certain price threshold. For most non-domestic energy users 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 an energy contract and the price threshold. The discount is phased in when the contract’s wholesale price exceeds the floor price, until the total discount per MWh reaches the maximum discount for that fuel.
Recognising that some non-domestic energy users are particularly vulnerable to high energy prices due to their energy intensive and trade exposure, (referred to as Energy and Trade Intensive Industries or ETIIs), these sectors will receive a higher level of support, subject to a maximum discount. The maximum discounts and price threshold for these sectors are:
- electricity - £89 per MWh with a price threshold of £185 per MWh
- gas - £40 per MWh with a price threshold of £99 per MWh
The government expects suppliers to contact non-domestic customers over the coming weeks to advise them of the implications of the scheme.