Last week the government announced the new Energy Bills Discount Scheme (EBDS) for UK businesses, charities, and the public sector, which will replace the Energy Bill Relief Scheme (EBRS) that ends on 31 March 2023. The new EBDS will run from 1 April 2023 – 31 March 2024 and will provide all eligible UK businesses with a discount on high energy costs.
The support provided by the EBRS to businesses was worth £18bn, which the government at the time made clear would be time limited, allowing businesses enough time to adjust. As latest data shows, wholesale energy prices have fallen to levels prior to Putin’s invasion of Ukraine and are now almost half that when the current scheme was announced.
The new scheme will be capped at £5.5bn and is designed to help businesses who signed contracts before the recent significant fall in wholesale price by providing them with long-term stability, whilst assuring other businesses against the risk of future price rises, and limiting taxpayer’s exposure to volatile energy markets.
How the EBDS will work:
The scheme will run from 1 April 2023 – 31 March 2024 and eligible non-domestic customers, with a licensed energy supplier contract, will receive a unit discount of up to £6.97/MWh for gas, and a unit discount of up to £19.61/MWh for electricity.
The unit discount will be subject to a wholesale price threshold of £107/MWh for gas, and £302/MWh for electricity.
Businesses with energy costs below the threshold will not receive support.
Suppliers will automatically apply the discount to the bills of eligible non-domestic customers.
For eligible Energy and Trade Intensive Industries (ETII):
A higher level of support will be provided to businesses identified within the most energy and trade intensive sectors – predominately manufacturing industries (see the full list of eligible industries) - as these businesses are often less able to pass on costs to their customers.
Eligible businesses within this category will receive a discount reflecting the difference between the price threshold and relevant wholesale price.
The price threshold will be £99/MWh for gas and £185/MWh for electricity.
This will be subject to a maximum discount of £40/MWh for gas and £89.1/MWh for electricity and will apply to 70% of energy volumes.
Businesses may need to register for this higher level of support. Details will be released by the end of March.
More guidance on the scheme can be found at gov.uk