Energy Bills Discount Scheme: help for businesses and other non-domestic customers

The Government has announced a new Energy Bills Discount Scheme (EBDS) from April 2023 to April 2024. This is for eligible non-domestic consumers in Great Britain and Northern Ireland.

Current support

The current Energy Bills Relief Scheme announced in September comes to an end in March 2023. It supports businesses and public sector organisations. This includes schools and hospitals by providing a discount on wholesale gas and electricity prices.

Many have benefitted from the discount since 1 October 2022. This includes eligible non-domestic customers facing significantly inflated gas and electricity prices due to global price pressures, triggered by Russia’s invasion of Ukraine.

The new scheme

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 the current levels of support were time-limited. This was intended as a bridge to allow businesses to adapt. Wholesale gas prices have now fallen to levels just before Russia’s invasion of Ukraine. Furthermore, they have almost halved since the current scheme was announced. The Energy Bills Discount Scheme therefore attempts to strike a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to turbulent energy markets. A cap has been set at £5.5 billion based on estimated volumes.

The discount

Following the current scheme the government will provide a discount on gas and electricity unit prices. Eligible non-domestic consumers will now receive a per-unit discount on their energy bills. This is 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 applied when the contract’s wholesale price exceeds the floor price, until the total discount per MWh reaches the maximum discount for that fuel.

It is recognised that some non-domestic energy users are particularly vulnerable to high energy prices due to their energy intensive and trade exposure. 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.

For more information and guidance on this, get in touch with our Business Services group on: 01903 2340494.