If you’re a business owner, you’ve probably been worried about soaring energy bills. The government’s new Energy Bills Discount Scheme took effect on April 1 but, just like the scheme it replaced, it’s not a price cap – so how does it work?
The Energy Bills Discount Scheme (EBDS) replaced the Energy Bill Relief Scheme (EBRS) on April 1. Unlike the domestic energy price cap (and supporting Energy Price Guarantee) this scheme will not cap the rates that suppliers charge. Instead, it will discount the unit rate commercial customers pay. Here’s all you need to know.
What is the Energy Bills Discount Scheme?
The Energy Bills Discount Scheme (EBDS) is a government scheme that will provide businesses with financial support with their energy bills. The scheme will replace the Energy Bill Relief Scheme (EBRS) on April 1 and will run for 12 months.
How does the Energy Bills Discount Scheme work?
The Energy Bills Discount Scheme will provide a discount on the unit rate of all non-domestic contracts signed on or after December 1, 2021. It will also discount the unit rates for businesses on out-of-contract and deemed rates. The scheme has two tiers. This is to offer broader support for businesses that use a lot of energy. The two tiers are:
Most business energy users
- Any non-domestic gas contracts with a unit rate of 10.70p per kWh or more will get a discount of £0.00697 (about 0.70p per kWh)
- Any non-domestic electricity contracts with a unit rate of 30.20p per kWh or more for electricity will get a discount of £0.01961 (about 2.00p per kWh)
- The lowest rate you can be discounted to is 10.70p per kWh of gas and 30.20p per kWh of electricity. If your business is already paying less than this, it won’t be eligible for the discount.
Energy Trade Intensive Industries
This includes mining and manufacturing industries (there’s a full list of qualifying Energy Trade Intensive Industries on the government website)
- Any non-domestic gas contracts with a unit rate of 9.9p per kWh or more will get a discount of 4.00p
- Any non-domestic electricity contracts with a unit rate of 18.5p per kWh or more for gas will get a discount of 8.91p
- These are maximum discount rates and will only apply to 70% of energy volumes, which means you’ll pay full rates for the remaining 30% of the energy you use.
Suppliers will automatically apply reductions to the bills of all eligible non-domestic customers.
The scheme won’t come into effect until March 31, when the Energy Bill Relief Scheme ends. Here’s more on how the current scheme works.
How to apply for the Energy Bills Discount Scheme last?
The discount will automatically be applied to your bills, regardless of whether your business is on a fixed contract or a variable contract, including deemed and out-of-contract rates. If you’re in the Energy Trade Intensive Industries category, you’ll need to apply. Check the government website for details.
Is your business eligible for the
Energy Bills Discount Scheme?
If your business has a non-domestic energy contract, it will be eligible for the Energy Bills Discount Scheme. This includes voluntary and public sector organisations.
The only exception are businesses that use gas or electricity to generate power that is sold back to the grid, such as power stations and grid-level battery storage facilities
The only other condition is that all eligible businesses are on one of the following contracts:
- An existing fixed price contract that was agreed on or after December 1, 2021. Or signing up to a new fixed-price contract.
- Deemed rates, out-of-contract rates, or a variable tariff
- Flexible purchase or a similar contract
What was the Energy Bill Relief Scheme?
The Energy Bill Relief Scheme gave businesses financial support with their energy bills for six months from October 1, 2022. But it wasn’t a business energy price cap. Instead, it discounted the rates that suppliers pay for energy. These savings were passed onto anyone with a non-domestic energy contract.
How did the Energy Bill Relief Scheme work?
Unlike a price cap, which sets a maximum rate suppliers can charge for energy, this scheme offered a discount on rates. For six months from October 1, suppliers paid no more than £211 per megawatt hour (MWh – equal to 1,000 kWh) of electricity and no more than £75 per MWh for gas.
As this isn’t a cap, it means that the discounted rates you pay are directly related to the contracted rates you pay. The better your contracted rates, the lower your discounted rates will be.
But if you’re on your supplier’s out-of-contract rates, these are usually a lot higher than contracted rates. Over the last 12 months, these rates have increased by up to 180%. This means you’ll be paying a much higher rate, even with the discount applied.
If you’re not on a fixed rate, it makes sense to switch to one as soon as possible.
How long did the Energy Bill Relief Scheme last?
The scheme was in place for six months from October 1, 2022, until March 31, 2023.
How to cut business costs
There are all sorts of ways to cut business costs. If you rent office space, it might be an idea to work from home or switch to a cheaper co-working space. If so, you can keep in touch with clients and colleagues with a conference call. Our service is worldwide and you can include up to 100 participants on one call.
If you’re in a business premises, you could try out these ways to make your business more energy efficient.
Image by mohamed_hassan on Pixabay.