The new Energy Bills Discount Scheme explained
The government has confirmed the details of scaled-back support for non-domestic energy customers, when the current Energy Bill Relief Scheme ends in March 2023.
The new Energy Bills Discount Scheme will start in April 2023 and run for a year, offering firms a unit discount of up to £6.97/MWh automatically on their gas bill and up to £19.61/MWh on their electricity bill.
Businesses in sectors with particularly high levels of energy use and trade intensity will receive a higher level of support under a new ETII (Energy and Trade Intensive Industries) Scheme.
We’ve got the details of both schemes here.
The Energy Bills Discount Scheme
The Energy Bills Discount Scheme will replace the Energy Bill Relief Scheme (EBRS) in April 2023.
- The scheme is for all eligible non-domestic customers who have a contract with a licensed energy supplier, including businesses, charities and the public sector.
- From 1 April 2023 to 31 March 2024, non-domestic customers will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill.
- This will be subject to a wholesale price threshold, set with reference to the support provided for domestic consumers, of £107/MWh for gas and £302/MWh for electricity. This means that businesses experiencing energy costs below this level will not receive support.
- Customers do not need to apply for their discount. As with the current scheme, suppliers will automatically apply reductions to the bills of all eligible non-domestic customers.
What’s the difference between the current scheme and the new Energy Bills Discount scheme?
Under the current EBRS scheme, the government set a supported price (essentially, a cap) on the wholesale price of energy: £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas.
Under the new scheme starting on 1 April 2023, firms will get a discount on wholesale prices rather than costs being capped. Firms get a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill.
Why is the government cutting energy bill support?
The government says that the £18bn package of support provided under the current scheme was “unprecedented”, “time-limited” and “intended as a bridge to allow businesses to adapt”. Since the launch of the scheme, Wholesale gas prices have halved, and are now at levels just before Putin’s invasion of Ukraine.
The new package of support is capped at £5.5 billion, and the government says it strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets.
The Energy and Trade Intensive Industries (ETII) scheme
A substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries. This will be known as the Energy and Trade Intensive Industries (ETII) Scheme:
- These businesses will receive a discount reflecting the difference between a price threshold and the relevant wholesale price.
- The price threshold for the scheme will be £99/MWh for gas and £185/MWh for electricity.
- This 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.
Who is eligible for the ETII scheme – and how to apply
The ETII sectors were identified via a government review, as those meeting certain thresholds for energy and trade intensity. To qualify as an ETII sector, the sector had to be above the 80th percentile for energy intensity (i.e., fall in the top 20% of sectors by energy intensity across the UK), and the 60th percentile for trade intensity (i.e., fall in the top 40% of sectors by trade intensity across the UK).
Energy and Trade Intensive Industries in scope of the additional support are listed on the government website. Businesses may need to register for the higher level of ETII support and details on how to apply will be released by the government by the end of March 2023.
Advice and support
If you would like advice on how the new energy bill support schemes affect you, our Bureau team can help, with impartial market intelligence that supports energy procurement decision-making. Get in touch for a no obligation chat with one of our specialists. We can also advise you on cost-effective ways to reduce your organisation’s consumption through better energy management. Find out more.
The new Energy Bills Discount Scheme explained