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- Everything you need to know about the Energy Bills Discount Scheme
Everything you need to know about the Energy Bills Discount Scheme
On 9 January, details of the new Energy Bills Discount Scheme (EBDS) were published. Find out where your firm may need to take action.
This follows government’s 3-month review into the operation of the Energy Bills Relief Scheme (EBRS).
Reminder of what was announced in the Energy Bills Relief Scheme (EBRS)
From 1 October 2022 until 31 March 2023, the Energy Bills Relief Scheme provided a discount on wholesale gas and electricity prices for all non-domestic customers including all UK eligible businesses. This support was equivalent to the Energy Price Guarantee put in place for households.
Suppliers applied reductions to the bills of eligible non-domestic customers. Further details of how the scheme worked can be found on the government website.
A similar scheme was established in Northern Ireland, providing a comparable level of support. For more information, see the government website.
What are the changes to the upcoming Energy Bills Discount Scheme (EBDS)?
The government has undertaken a 3-month review into the operation of the scheme. This has informed decisions on future support after March 2023, determining those who are eligible for further support.
Following this review, the government has announced a new business energy scheme from 1 April 2023 to 31 March 2024 for eligible non-domestic consumers in Great Britain and Northern Ireland.
The Energy Bills Discount Scheme (EBDS) will see the value of government support reduce from the current £18 billion scheme to a cap set at £5.5 billion, based on estimated volumes.
Key details of the EBDS can be found on the HMT website here. Some reflections are as follows:
- The standard discount will be universally applied to all businesses. It will be applied to the unit rate of energy once prices go above a certain level.
- Eligible non-domestic consumers will now receive a unit discount of up to £6.97/MWh unit discount to their gas bill and a unit discount of up to £19.61MWh to their electricity bill between April 2023 to March 2024, above a threshold of £107/MWh for gas and £302/MWh of electricity.
- The new scheme will provide more generous support for Energy and Trade Intensive businesses. These are defined in broader terms than the typical Energy Intensive Industries. A full list of sectors covered by the new category can be found here.
- For those sectors in scope, the discount will only apply to 70% of energy volumes and will be subject to a ‘maximum discount’ of £40.0/MWh for gas and £89.1/MWh for electricity. The threshold price will be £99/MWh for gas and £185/MWh for electricity.
What do businesses need to do?
You do not need to apply to the scheme – if you are eligible, there is nothing you need to do.
Suppliers will automatically apply reductions to the bills of all eligible non-domestic customers. The government will then compensate suppliers for the reduction in wholesale prices. This support will be the same across suppliers, but individual bills will continue to vary across different contracts and tariffs.
Businesses may need to register to be eligible for the Energy and Trade Intensive scheme. Details on how to apply will be released in due course.
The CBI response & next steps
In response to the package, CBI Director for Decarbonisation Policy, Tom Thackray, said:
“The extension to the scheme will provide respite for many firms at the start of the year and help them plan ahead for the next 12 months with more certainty.
“It’s unrealistic to think the scheme could stay affordable in its current form, but some firms will undoubtedly still find the going hard. The Government has done much to protect businesses through the energy crisis. It must remain open, flexible and pragmatic in its approach to volatile wholesale energy markets as the year unfolds.
“Heavy energy users and those exposed to global trade are among some of the most impacted in the current crisis, so the additional support for these firms is a particularly welcome step.”
Longer term let’s work now on contingency for more targeted policy options that be needed in the future (e.g., next winter). Let’s make businesses more resilient to shocks by giving them additional incentives to make themselves more energy efficient.
How to get involved
The CBI is hosting a webinar on 11th January @ 10am detailing what has been announced with the new EBDS and how this will impact business. To join the webinar, register here.
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