New Energy Bills Discount Scheme launched for businesses

On Tuesday 9^th January the government announced a new Energy Bills Discount Scheme that will replace the current Energy Bill Relief Scheme which ends in March.

The Energy Bill Relief Scheme launched by government last year, was designed to be a temporary measure to help businesses tackle spiraling energy costs. However, the latest data has now shown that the wholesale gas price has once again decreased to levels just before the Ukraine invasion, almost halving since the Energy Bill Relief Scheme was announced.

Why has the government announced a new scheme?

Even with energy prices now at more manageable levels, the government still wants to ensure businesses and organisations are supported, whilst limiting the taxpayer’s exposure to volatile energy markets.

All eligible UK businesses and non-domestic energy users including charities and the public sector will receive the discount. The cap for the scheme is currently set at £5.5 billion based on estimated volumes and will run for twelve months starting on the 1^st of April 2023 and ending on the 31^st of March 2024.

How does the new scheme benefit businesses?

The government intends for the new Energy Bills Discount Scheme to help businesses by offering a discount on their energy bills, to provide budget certainty and price security.

For businesses who secured fixed price contracts at a time when energy prices were at their highest, the scheme will help them to manage their costs and provide others with reassurance against the risk of prices rising again.

How much discount can businesses expect?

The new scheme will be automatically applied to eligible businesses bills who have a contract with a licensed supplier and will see a unit discount of up to £6.97/MWh to their gas bill with a price threshold of £107 per MWh, and a unit discount of up to £19.61/MWh with a price threshold of £302 per MWh to their electricity bill. This discount, however, will not include those who are benefitting from lower energy prices.

For businesses who require more substantial support with their energy such as Manufacturers, for example, will receive a gas and electricity bill discount based on a supported price which will be capped by a maximum unit discount of £40/MWh with a price threshold of £99 per MWh for gas and £89/MWh with a price threshold of £185 per MWh for electricity. Eligible energy intensive customers will have to apply for the higher level of support. Further details on how this will work will be published by the government in due course.

“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 needed to make sure the market is working for businesses.”

Chancellor of the Exchequer, Jeremey Hunt

Ensure you receive the correct discount with expert support

For many businesses and organisations, managing your budgets is a top priority and SystemsLink’s experts can help to ensure you are receiving the correct discount from this new scheme as well as a whole host of other cost and energy saving opportunities.

Commercial Director, Alan Fordham, commented:

“This new scheme is very different than the previous one. It will need active input from energy intensive businesses to receive the higher discount which covers a large number of industries.

“Having their energy costs supported for another twelve months will give businesses some relief, but they should seek expert advice to ensure they receive the full discount.”