What is the Energy Bills Discount Scheme?

Are you intrigued by the Energy Bills Discount Scheme (EBDS) that's been grabbing attention in the news but unsure of what it entails? Fear not, we've got you covered.

The government has announced a new support scheme starting in April 2023 to help businesses and public sector organisations cope with the inflation of gas and electricity prices. And let's be honest, who couldn't use a little break from those high energy bills? It’s ludicrous out in the energy streets right now.  

What has happened to our energy bills?

There are several factors that have contributed to the inflation in gas and electricity prices over the past year or so. One major factor is the global increase in demand for energy as economies recover from the COVID-19 pandemic. In addition, geopolitical tensions such as the invasion of Ukraine and the resulting sanctions have also played a role in driving up energy prices. These factors have all contributed to the challenging situation faced by businesses and organisations that rely on energy to operate.

This new scheme is a game changer and is different from the relief scheme from last year, which will come to an end in March. The new Energy Bill Discount Scheme (EBDS) will provide a discount on wholesale gas and electricity prices to eligible non-domestic customers only. This means that if you are on an existing fixed price contract that was agreed on or after December 1, 2021, signing a new fixed price contract, out of contract or on standard variable tariffs, or on a flexible purchase or similar contracts, you may qualify. 

For most non-domestic energy users in Great Britain and Northern Ireland, the maximum discounts have been set at £19.61 per megawatt-hour (MWh) for electricity with a price threshold of £302 per MWh and £6.67 per MWh for gas with a threshold of £107 MWh. However, if you're in an Energy and Trade Intensive Industry (ETII), such as a manufacturer, you'll receive a higher level of support subject to a maximum discount. This discount will only apply to 70% of your energy volumes, and the maximum discounts and price thresholds for ETIIs are £89 per MWh for electricity with a price threshold of £185 per MWh and £40 per MWh for gas with a threshold of £99 per MWh. Bit confusing right?

So how does it work?

Similar to the previous scheme the discounts will be applied automatically to your bill, and you'll receive a per-unit discount on your energy bills during the 12-month period from April 2023 to March 2024. The government will pay suppliers for the reduction of wholesale gas and electricity unit prices, which will be reflected as a discount in pence per kilowatt hour (p/kWh) on eligible customers' bills. The p/kWh government support for comparable contracts will be the same across suppliers, but the absolute level of individual bills will continue to vary across different contracts and tariffs. If you believe your supplier is not applying the discount correctly, you should contact them directly in the first instance.

Want more information, check the link: here:https://www.gov.uk/guidance/energy-bills-discount-scheme