What is the Energy Bills Discount Scheme?

The Energy Bill Relief Scheme (or EBDS) came into effect in October 2022, and provides a discount on wholesale gas and electricity prices for all non-domestic consumers – including public sector organisations, and voluntary sector organisations (such as charities, businesses etc).

Originally this scheme was always intended to run until 31 March 2023, simply as a six-month temporary fix used to protect non-domestic consumers from increasing energy costs.

Published in a statement by HMRC on the 9th of January, it’s been said that the new scheme strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion based on estimated volumes. It will run for exactly 12 months, starting from 1 April 2023 and up until the 31 March 2024.

How do I know if I’m eligible for the Energy Bills Discount Scheme?

The EBDS will be available to everyone on a non-domestic contract including businesses, voluntary sector organisations, and public sector organisations (schools, hospitals, and care homes). As long as they are on existing fixed price contracts that were agreed on or after 1 December 2021, signing new fixed price contracts, on deemed / out of contract or standard variable tariffs, on flexible purchase or similar contracts, and on variable ‘Day Ahead Index’ (DAI) tariffs (Northern Ireland scheme only).

How much will bills be reduced?

The government will provide a discount on your gas and electricity unit prices. If you are eligible, you will now receive a per-unit discount to your energy bills during the 12-month period from April 2023 to March 2024 (subject to a maximum discount).

For most non-domestic energy users in Great Britain and Northern Ireland 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

It is calculated as the difference between the wholesale price associated with an energy contract and the price threshold.

Recognising that some non-domestic energy users in Great Britain and Northern Ireland are particularly vulnerable to high energy prices due to their energy intensive and trade exposure, (referred to as Energy and Trade Intensive Industries or ETIIs), these sectors will receive a higher level of support, subject to a maximum discount. This discount will only apply to 70% of energy volumes. Find out if you are eligible for that here.

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

How does it work?

Suppliers will automatically apply reductions to the bills of all eligible non-domestic customers, just as the original scheme did. However, the eligible ETII customers will have to manually apply for the higher level of support.

The discount applied will be in pence per kilowatt hour (p/kWh). The p/kWh government support for comparable contracts will be the same across suppliers, but the absolute level of individual bills will continue to vary across different contracts and tariffs.

You can find out more via the GOV website here.

If you have any further questions or need guidance, please do not hesitate to get in contact with us at any time here.