With the energy crisis lasting longer than first predicted, the UK government has launched a new Energy Bills Discount Scheme (EBDS) for non-domestic customers to run from 1 April 2023 to 31 March 2024. The scheme offers eligible businesses discounts of up to 20% on predicted wholesale prices.
The EBDS replaces the Energy Bill Relief Scheme which ran between 1 October 2022 and 31 March 2023, and supported businesses and public sector organisations by providing a discount on wholesale gas and electricity prices.
Comprising three parts, the EBDS will mainly target those energy and trade intensive sectors most affected by the record rise in global energy prices.
Amongst those sectors set to benefit are ceramics and textiles, but any business that requires heavy energy usage to produce and deliver its goods could be eligible. Most likely to receive the discount are those businesses that remain exposed to strong international competition, meaning they cannot raise their product prices to cover higher bills.
The 3 parts to the EBDS
To ensure the scheme is fair and reflects the differing levels of energy consumption between industries, the EBDS is separated into three parts.
- EBDS baseline discount: The baselines discount is universal, meaning it will provide energy bill support for all non-domestic customers in Great Britain and Northern Ireland, and will be applied automatically.
The per-unit discount applies to the 12-month period from April 2023 to March 2024 subject to a maximum discount of:
- Electricity – £19.61 per megawatt hour (MWh) with a price threshold of £302 per MWh
- Gas – £6.97 per megawatt hour (MWh) with a price threshold of £107 per MWh
It should be noted that most non-domestic customers do not consume this level of energy so will not feel the impact of the EBDS on their energy bills. We therefore recommend that these customers continue to explore the market as normal for the best deals.
2. The Energy and Trade Intensive Industries (ETII) discount: ETII provides a higher level of support to non-domestic customers in eligible sectors and can only be acquired through an application process.
ETII eligibility requires a customer to demonstrate that at least 50% of its revenue is generated from UK-based activity. Successful applicants will receive a discount in the difference between the price threshold and the relevant wholesale price to a maximum of:
- Electricity – £185 per MWh
- Gas – £99 per MWh
Unlike the EBDS baseline discount, ETII has a deadline and organisations have 90 days starting from 26 April 2023 to apply. Even if an eligible organisation is charged lower rates than the discount threshold, we recommend applying anyway in case of further market turbulence.
If you think your organisation is eligible for ETII, be aware that the application process requires more than simply filling out an online form.
As well as a signed director’s declaration letter and additional financial evidence, you will need to supply a range of details pertaining to your organisation and energy supplier.
You can find all the details needed and ways to submit your application here.
3. The Heat Network discount: This discount applies to heat networks with domestic end consumers and, like ETII, can only be acquired through an application process.
Although domestic customers are not covered by the EBDS, the Heat Network discount is the one they are most likely to benefit from indirectly.
The EBDS will support the wholesale aspect of a heat network’s energy tariff until the Minimum Supply Price is reached, with the threshold set at:
- Electricity – £340 per MWh
- Gas – £78.3 per MWh
To pre-empt eligible heat suppliers from needing to access the support at a later date, all are required to apply for the discount now and pass the discount down to their domestic customers.
As with ETII, the Heat Network discount requires organisations to produce a range of materials. The full list of required evidence and application gateway can be found here.
What happens after 31 March 2024?
At the time of writing, no further announcements have been made. However, the previous Energy Bill Relief Scheme was subject to review after its first three months, so it’s likely this will be repeated.
Any review will assess the effectiveness of the scheme and the findings will inform decisions as to what happens next.
In the meantime, if you would like Red Hawk’s advice on this or any other energy related matter, please get in touch.
