Following the launch of the Energy Bill Relief Scheme (EBRS) in October 2022, businesses have been left wondering what support, if any, will be available once the scheme ends on 31 March 2023.
On 9 January 2023, it was confirmed that further support will be available to businesses, charities, and the public sector through the Energy Bills Discount Scheme (EBDS). The new scheme will come into force from 1 April 2023, and will remain in place for a whole year, until 31 March 2024.
We understand that the EBDS will work quite differently to the support provided under the current EBRS. Here, we have summarised our understanding of how the new scheme will support non-domestic energy customers.
SECTION 1: WHO IS ELIGIBLE?
As with the current scheme, support will be available for all non-domestic customers, including UK businesses, voluntary sector organisations (such as charities) and public sector organisations (such as schools and hospitals).
The EBDS will be available to all non-domestic customers who are:
– in a fixed price contract agreed on or after 1 December 2021
– about to enter into a new fixed price contract
– on a deemed/out of contract/variable tariff
– on flexible purchase or similar contract
SECTION 2: WHAT IS THE NEW DISCOUNT?
Businesses can expect to receive a per-unit discount to their energy bills, for consumption between 1 April 2023 and 31 March 2024.
As with the EBRS, customers do not need to apply for the discount. Energy suppliers will automatically apply a discount to the bills of customers that qualify for the scheme.
Unlike the current scheme, businesses will only receive a discount when wholesale energy prices go over a certain price threshold. These parameters have been set as:
Scenario 1- Electricity
A maximum discount of £19.61/MWh when wholesale prices are above £302/MWh.
Scenario 2 – Gas
A maximum discount of £6.97/MWh when wholesale prices are above £107/MWh.
The total discount received will reflect the difference between the relevant wholesale price and the price threshold. For example, if the wholesale price for an electricity contract is £320/MWh, that business will be entitled to a discount of £18/MWh (or 1.8p/kWh).
Relevant wholesale price £320
Threshold discount £302
Total discount £18
SECTION 3: PASSING ON THE EBRS BENEFIT TO CUSTOMERS
Under the Regulations, the Heat Supplier must provide customers with evidence of what factors have been taken into consideration in determining that the pass-through amount is just and reasonable. That Heat Supplier should consider:
– The amount the Heat Supplier paid for energy, which was subject to price reductions under the EBRS.
– Any other costs incurred in supplying heat and/or hot water during the period it is benefiting from the EBRS – this includes costs from heat losses, efficiency of generation, operation, maintenance, and capital costs.
– Any losses incurred as a result of the cost of purchasing energy exceeding the amount charged to customers, for the supply of heat and/or hot water during the period for which the benefit was provided.
SECTION 4: HOW DOES THIS COMPARE TO THE ENERGY BILL RELIEF SCHEME?
Under the new scheme, the unit discount received is subject to a wholesale price threshold, meaning that if wholesale prices stay below the threshold, no discount will apply. This therefore takes some customers out of scope for support where they were previously receiving it.
Under the current scheme, the government supported price is set at £211/MWh (21.1p/kWh) for electricity and £75/MWh (7.5p/kWh) for gas.
SECTION 5: PASS THROUGH REQUIREMENTS FOR HEAT NETWORKS
As with the current scheme, Heat Suppliers in receipt of the EBDS must pass on the benefit of reduced prices to their end customers (both domestic and non-domestic) and provide information on how they will do this.
We recommend you refer to this document for more information on the requirements that apply.
SECTION 5: GET IN TOUCH
It’s important to stress that energy brokers do not have any influence over the unit cost reductions applied under the scheme. If you are currently out of contract and have been waiting for details of the support available, the government advice is to enter a new fixed term contract as normal.
Our team will continue to monitor announcements from the government and will provide updates across our website, LinkedIn and Twitter.
For further information or support please contact your Energy Manager in the first instance.
Alternatively, please contact the team on 01279 810 120 or at firstname.lastname@example.org.