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Introducing the Energy Bills Discount Scheme

Energy Bills Discount Scheme

The chancellor of the exchequer, Jeremy Hunt, has finally revealed details behind the new Energy Bills Discount Scheme.

Coming into force from 1st April 2023, the new package will replace the outgoing Energy Bill Relief Scheme and support UK businesses, charities, and public sector bodies with surging energy costs.

For those of you who’ve just got your head around the previous scheme, today’s announcement probably leaves you feeling like you’re back to square one.

For this reason, we’ve broken down into simple terms what the new discount means, how it’s applied and who is eligible.

How does the Energy Bills Discount Scheme differ from the existing relief scheme?

As things stand until 31st March 2023, the current relief scheme works by subsidising the cost of wholesale energy. To do this, they set a ‘Government Supported Price’ at 21.1p/KWh for electricity and 7.5p/KWh for gas.

Under the new Energy Bills Discount Scheme, instead of capping wholesale energy prices, the government will now apply a discount to your unit rates, set at a maximum of 1.9p/KWh for electricity and 0.69p/KWh for gas.

Please note, these discounts will only be applied when wholesale prices exceed 30.2p/KWh for electricity and 10.7p/KWh for gas.

Bear in mind, this is a maximum discount and not all of it will be applied automatically. If the wholesale price is only 0.3p above the threshold, then this will be the only discount applied.

Is the Energy Bills Discount Scheme the same for all businesses?

No, the government has announced that discounts will be higher for businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries.

For Energy and Trade Intensive Industries (ETIIs) that are eligible, discounts will be set at a maximum of 8.9p/KWh for electricity and 4p/KWh for gas. With ETIIs considered more vulnerable due to their high energy usage, the wholesale price threshold for these businesses is also lower, set at 18.5p/KWh for electricity and 9.9p/KWh for gas.

You can find out here if your business qualifies under the ETII scheme.

Is my business eligible?

The discount will be available to everyone on a non-domestic contract including businesses, voluntary sector organisations (such as charities), and public sector bodies, including schools, care homes and hospitals who 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.
  • On variable ‘Day Ahead Index’ (DAI) tariffs (Northern Ireland scheme only).

Do I need to apply for the discount?

No, for everyday businesses, the discount will be applied automatically to your bills and requires no action from your end. Only eligible ETII customers will have to apply for the higher level of support. As of writing, we are waiting for confirmation from the government on what this process will involve.

Furthermore, be conscious of potential scammers trying to take advantage of the uncertainty. If you receive a message from someone requesting your bank details that you believe may be fraudulent, you can officially report any suspicious messages online to the UK government.

Will my energy prices increase from 1st April 2023?

There’s no denying that the new Energy Bills Discount Scheme offers substantially less protection against rising energy prices than the previous scheme.

However, it’s not all bad news.

Wholesale prices are traditionally higher over the winter months, with the cold weather increasing the demand for gas and electricity. A relatively mild winter has seen wholesale prices fall considerably in January 2023 and storage levels are higher than originally forecast. So, whilst the levels of support are lower, the fall in wholesale energy costs do provide some light at the end of the tunnel for struggling UK businesses.

What the reduced measures do highlight is the importance for businesses to get their energy procurement processes right. Expert consultation can enable you to access energy contracts that best fit your business needs.

How can Procure Smart help me?

To help businesses like yours, we have created a super-easy process for our experts to gather the necessary information to assess your costs and investigate savings, fast.

To begin with, all we need is just a few bits of basic information. This includes copies of your latest gas and electricity bills and a signed Letter of Authority (LOA). With this, we can analyse your current spending and then approach suppliers on your behalf to procure the best energy contracts for your business.

Our dedicated account management team will oversee the whole process and deal with any queries from suppliers.

Find out more about our hassle-free business energy switching service and read our team’s answers to some of our customers most frequently asked questions.

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