The challenge of increasing energy costs for UK businesses is a significant concern, particularly in the context of ongoing efforts to reduce greenhouse gas emissions and tackle climate change.
The current Chancellor, Jeremy Hunt, pledged in his November statement that the government would continue to support those businesses that need it the most. However, the changes to the scheme and its funding represent a fall from £18bn over six months to £5.5bn for EBDS.
The Energy Bills Discount Scheme
The scheme is now live and will last until 31 March 2024. A unit discount of up to £6.97/MWh for gas and up to £19.61/MWh for electricity for all eligible non-domestic customers will be automatically applied.
EBDS organisational eligibility
The criteria are the same as the previous Energy Bill Relief Scheme and is available to anyone on a non-domestic contract, including:
- Public sector organisations such as schools, care homes and hospitals
- Voluntary sector organisations
- Businesses
EBDS energy contract eligibility
Businesses and organisations must either be:
- 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)
How is this different to the previous scheme?
The unit discount of £6.97/MWh for gas and up to £19.61/MWh for electricity is subject to a wholesale price threshold of £107/MWh for gas and £302/MWh for electricity – this means that businesses who have energy cost below those thresholds will not receive support.
This change will mean some businesses are no longer within the scope for receiving government support because under the previous Energy Bill Relief Scheme, the supported price was set at £211/MWh for electricity and £75/MWh for gas.
Energy and trade intensive industries
Eligible Energy and Trade Intensive Industries (ETII) will receive a discount that reflects the price difference of £99/MWh for gas and £185/MWh for electricity and the relevant wholesale price.
This will apply to 70 per cent of energy volumes and will be subject to a maximum available discount of £40/MWh for gas and £89.10/MWh for electricity.
The industries eligible under this scheme are varied, from nature reserves and libraries to meat processing.
If you’re concerned about the impact of rising costs to your business, speak to a member of our team for cashflow forecasting and management accounts.