The government has unveiled the “Energy Bills Discount Scheme,” set to provide discounts on energy bills for UK businesses, charities, and the public sector starting in April.
Replacing the Energy Bill Relief Scheme
The Energy Bill Discount Scheme (EBDS) will take effect on 1st April 2023 and will replace the Energy Bill Relief Scheme (EBRS) when it ends on 31st March 2023. The new scheme is open to businesses that have entered into a contract since 1st December 2021, as well as those without a contract or on variable price agreements. The EBDS will run for a year.
What will the support be?
Here’s how the government will help non-residential customers who are eligible and have a contract with a licenced energy supplier:
- From 1st April 2023 to 31st March 2024, all eligible non-domestic customers who have a contract with a licensed energy supplier 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.
Government support for eligible Energy and Trade Intensive Industries:
- These companies will get a discount equal to the difference between a certain price threshold and the 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.
There is no price cap.
The EBDS protects businesses less from changes in the energy market than the EBRS, which is already in place.
Under the EBRS, which is set to expire in March, the government caps the cost of commodity energy for businesses and covers the difference between the contracted energy price and the cap.
However, under the new EBDS, set to begin in April, there is no cap on prices. Instead, businesses are given a small discount if the contracted energy price exceeds a certain threshold.
The change from a cap to maximum discounts shifts the risk of energy market fluctuations back onto businesses, requiring them to proactively manage this risk.
Get in touch
If you need assistance with tax or accounting needs, please contact us at enquiries@aitaccountants.co.uk and we’ll be happy to help.
0 Comments