UK Energy Bill Discount Scheme

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On Monday 9 January 2023 the UK Government announced the current Energy Bill Relief Scheme (“EBRS”) will be replaced by the Energy Bill Discount Scheme (“EBDS”).

Applicable Period

The support provided under the new EBDS, will run for a period of 12 months from 1 April 2023 to 31 March 2024, at levels significantly below the previous support.

Eligible Businesses

The scheme will be available to all on a non-domestic contract, including public sector organisations, voluntary (not-for-profit) organisations such as charities.

Contract Types

The new EBDS scheme will be available to any business on (i) an existing fixed price contract agreed on or after 1 December 2021 (ii) signing a new fixed price contract (iii) on deemed/out of contract or standard variable tariffs (iv) a flexible supply contract (v) a variable "Day Ahead Index" (DAI) tariffs (Northern Ireland scheme only).

Discount Mechanism

As with the current EBRS, with the replacement EBDS the government will provide a discount on businesses gas and electricity unit prices which the energy suppliers will automatically apply to the businesses invoices. However, the EBDS discount is set at a level lower than the current EBRS and again will be subject to a maximum discount. The levels set are, electricity £19.61/MWh with a price threshold of £302/MWh. Gas £6.97MWh (20.43 p/therm) with a price threshold of £107/MWh (313.59 p/therm).

An Example

Electricity

A business customer has a unit price of £340/MWh, the discount applied is: £340/MWh minus £19.61/MWh bringing the price down to £320.39/MWh.

Gas

A business customer has unit price of £166.30/MWh, thus the discount applied is: £166.30/MWh minus £6.97/MWh bringing the price down to £159.33/MWh.

Energy and Trade Intensive Industries (ETIIs)

The government has recognised that certain non-domestic energy users in the UK and Northern Ireland are vulnerable to higher energy pricing due to their energy intensive and trade exposure. As a result, these sectors will receive a greater discount which will only apply to 70% of energy volumes, levels set are, electricity ‘maximum discount’ £89.1/MWh with price threshold of £185/MWh and gas ‘maximum discount’ £40/MWh with a price threshold of £99/MWh.

Eligible sectors (ETII's), can be found here.

Eligibility, and the application process will be published by the government in due course.

Reductions

As with the original scheme, suppliers will automatically apply reductions to the bills for all non-domestic customers.


More: Market Updates, Electricity, Natural Gas, Energy Bill Discount Scheme


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