In April 2023, there will be a significant change in government support for business energy bills as the current relief scheme comes to an end. The new support that will take effect from the start of April is the Energy Bill Discount Scheme. Although similar sounding to the old Energy Bill Relief Scheme, there are big differences.
In summary, the Energy Bill Discount Scheme is significantly less generous than its predecessor, and many businesses may not get any discount at all.
This article explores everything business owners need to know about the latest government support for business energy bills.
What’s changing in the government support for business energy?
Before diving into the key details of the Energy Bill Discount Scheme, let’s explore the key difference between the new and old government business energy support schemes.
Here’s a graphical comparison of discounts offered by the two schemes:
The energy bill discount scheme is significantly less generous. In the example of a typical pub set out on the government website, a discount under the old scheme of £3,100 per month would be typical. Under the new scheme, that same pub will receive a discount of just £189 each month.
What’s more, this discount is a maximum figure; let’s explore why most businesses won’t benefit from any discount under the new scheme.
Why most companies will not benefit from the Energy Bill Discount scheme
The Energy Bill Discount Scheme only kicks in if the wholesale rates of electricity and gas exceed the following:
- 30.2p/kWh for electricity; or
- 10.7p/kWh for gas
Under this level, the scheme does not provide a discount on business energy bills.
An unseasonably warm winter has resulted in a significant fall in wholesale business energy prices. If your business has recently signed up for a new business energy tariff, the wholesale rates you’ll be paying are likely significantly lower than these thresholds.
The easing of wholesale energy costs is, of course, good news for businesses. There are significantly cheaper energy rates now on offer in the market. Get the latest quotes for your business with our business electricity comparison and business gas comparison tools.
Key details of the Energy Bills Discount Scheme
Here are the key details you need to know about the Energy Bills Discount Scheme:
Energy Bills Discount Scheme dates
The Energy Bill Discount Scheme will apply to business energy bills in the 12 months from the 1st of April 2023 to 31 March 2024.
Energy Bills Discount Scheme eligibility
The Energy Bill Discount Scheme will apply to all non-household properties, including businesses, charities and other organisations, on any type of electricity or gas tariff.
The one exception is fixed price energy tariffs agreed on before 1 December 2021 – but this is a moot point because the energy prices back then were significantly cheaper. You’ve been very lucky if you still have a fixed energy contract from before 2022.
Discounts available under the Energy Bill Discount Scheme
You’ll only receive a discount under the scheme if the wholesale element of your current energy tariff exceeds:
- 30.20p/kWh of electricity
- 10.7p/kWh of gas
You’ll receive a discount for any cost greater than these thresholds, up to a maximum discount of:
- 1.961p/kWh of electricity
- 0.697p/kWh of gas
It’s worth remembering that the wholesale charge is only one component of your energy bill; here’s a helpful guide to the different components of a business gas bill.
How do you apply for the Energy Bill Discount Scheme?
You don’t; the Energy Bill Discount Scheme is automatic. Your business energy supplier will automatically calculate and apply the discount to your electricity and gas bills.
Comparing business energy with the discount scheme
The Energy Bill Discount Scheme applies automatically regardless of your current business energy supplier or your current electricity and gas tariffs.
Unlike its predecessor, the Energy Bill Discount Scheme will only provide a small discount to businesses. It’s really important to ensure your company is signed up for a competitive deal with your business energy supplier.
If you’re approaching the end of a business energy contract or you’re currently out of contract, we recommend comparing the energy market to see what’s available.
Use our business energy comparison service to get quotes tailored to your business today.
Energy Bill Discount Scheme – FAQs
Here are the additional things business energy owners are asking about the new government scheme supporting business energy rates.
How much is Energy Bill Discount Scheme costing?
As mentioned above, the discounts available under the new scheme are significantly lower than the previous scheme.
Although future trends in the energy markets are difficult to predict, the government has allocated maximum funds to the scheme of £5.5bn – significantly lower than the £18bn the Energy Bill Relief Scheme is expected to cost.
Does the energy price cap apply to businesses?
No, the regulator Ofgem enforces an energy price cap on all household energy suppliers.
There is no equivalent in the business energy market.
Does the Energy Price Guarantee apply to businesses?
No, the Energy Price Guarantee applies only to electricity and gas supplied to homes.
The Energy Bill Discount Scheme and the Energy Bill Relief Scheme apply to any property that isn’t a home.
