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Update on the Energy Bills Discount Scheme: What does it mean for you?

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David
Thomas
Energy Lead
Our Energy Lead for 2buy2, Dave unravels the complexities of sourcing energy solutions, offering strategic perspectives that illuminate pathways toward sustainability and efficiency.
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Due to the UK energy crisis, the government introduced an Energy Bill Relief Scheme (EBRS) last year to support non-domestic customers. This relief scheme is set to run its course in March 2023. With the crisis still firmly in place, the government has introduced a new bill – the Energy bills Discount Scheme (EBDS) – that aims to continue the support from the previous relief scheme.

The EBDS will start April 1st 2023, it will be replacing the Energy Bill relief Scheme when that runs its course on March 31st 2024.

The new scheme aims to balance supporting organisations over the next 12 months, while limiting exposure to volatile energy markets. The cap for this new scheme will be set at £5.5 billion.

Businesses, voluntary organisations and public service organisations are still covered, and the discount will be applied automatically for those that are:

  • Signing new fixed term price contracts
  • Already on an existing fixed-price contract/contracts agreed on or after the 1st December 2021
  • On flexible purchase or similar contracts
  • On deemed/out of contract or standard variable tariffs

The discount will be a pre-unit discount to your energy bills between April 2023 and March 2024. The relative discount will be applied if wholesale prices are above a specific price threshold, however, the maximum discounts for non-domestic energy users in Great Britain for gas and electricity are the following:

Gas – £6.97 per MWh (0.697p/KWh) with a price threshold of £107 per MWh (10.7p/KWh)

Electricity – £19.61 per MWh (1.961p/KWh) with a price threshold of £302 per MWh (30.2p/KWh)

There is a key difference between the current EBRS and the upcoming EBDS – the amount of financial support being offered. The EBRS has a package of £18.4 billion across six months and the new support scheme is capped at £5.4 billion across 12 months. This will sadly mean that generally, less support will be offered to organisations that are already struggling.

While wholesale energy costs have plummeted recently, with Ofgem noting that wholesale electricity costs have seen an annual fall of 23% and gas prices plummeting by 38% over this timeframe, energy is bought well in advance so consumers would only see the price drop 4-6 months later.

For reference, here are the current wholesale Electricity and Gas figures from Ofgem as of January 2023.

Ofgem Electric Final 77C0B677

We can only wait and see as to the impact of this EBDS. Times are tough and we hope you are all managing to stay afloat. If you’re struggling and want to see how we can help you avoid costs and save money, click here.

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