The New Energy Bills Discount Scheme Explained – Update 16/01/23

The Government has announced that it will bring in the new Energy Bills Discount Scheme to provide protection to businesses following the end of the current Energy Bill Relief Scheme which expires at the end of March this year.

Article updated 16/01/23

The Chancellor of the Exchequer Jeremy Hunt has described the current scheme as “unsustainably expensive”, predicting that it would cost around £18.4bn over six months. The new scheme, due to run from the 1st April 2023 until the 31st March 2024 has been estimated at a much reduced cost of £5.5bn.

Speaking about the new Energy Bills Discount Scheme, Jeremy Hunt stated:

“My top priority is tackling the rising cost of living – something that both families and businesses are struggling with. That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able.
Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine. But to provide reassurance against the risk of prices rising again we are launching the new Energy Bills Discount Scheme, giving businesses the certainty they need to plan ahead.
Even though prices are falling, I am concerned this is not being passed on to businesses, so I’ve written to Ofgem asking for an update on whether further action is action is needed to make sure the market is working for businesses.”

To help make sense of exactly what this might mean for you and your business, we reached out to NCASS Partner USE Solutions, who explained:

Under the new scheme, the threshold at which support will be available has increased significantly from 21.1p/pkwh to 30.2p/pkwh for electric and from 7.5p/pkwh to 10.7p/pkwh for gas. Support under the new scheme will only be applied where wholesale costs exceed the supported price of 30.2p/pkwh for electric and 10.7p/pkwh for gas. At the time of writing, the published wholesale costs for last week were 17.25p/pkwh for electricity and 5.71p/pkwh for gas – considerably lower than the qualification threshold. For eligible Energy and Trade Intensive Industries, the government is announcing the price threshold for the scheme will be 9.9p/pkwh for gas and 18.5p/pkwh for electricity.

Discounts: Under the new Energy Bill Discount Scheme, the support is considerably less than the existing scheme where, at the wholesale market peak, discounts of up to 55.05p/pkwh for electricity and 17.64p/pkwh for gas* are being applied for energy consumed in fixed contracts between 1st October 2022 and 31st March 2023. Under the new EBDS, maximum discounts of up to 1.961p/pkwh for electricity and 0.697p/pkwh for gas will be applied for eligible non-domestic customers.

Discounts are dependent on the published wholesale commodity costs on the date the contract was agreed and for the first time under the Energy Bill Relief Scheme, on week commencing 26th December 2022, the published wholesale prices for gas and electricity was lower than the government supported price. Consequently, no relief was to be applied for contracts agreed that week under the terms of the EBRS scheme. At the time of writing, the published wholesale prices for gas and electricity remain lower than the government supported price.

You can find the latest discount table on the following link – this will download the latest prices direct from the government website in the form of an Excel document you can access here.

Once the document is downloaded, click on the ‘Fixed Contracts’ tab to access the discount rates.

You can read the full Government announcement here. To keep up to date with relevant industry news click here

To tell us how the new scheme affects you so we can continue to feedback to government please email [email protected] 

To talk to USE Solutions about how they may be able to help you cut your energy costs click here.