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The Energy Bills Discount Scheme

The Energy Bills Discount Scheme (EBDS) will provide business energy discounts to qualifying non-domestic customers through their energy invoices immediately after the closure of the Energy Bill Relief Scheme (EBRS). 

The EBDS will run for 12 months from 1 April 2023 to 31 March 2024.

In line with the EBRS, the EBDS will be available to everyone whose energy is supplied on or through a non-domestic contract, including (subject to meeting the eligibility for the scheme):

• Businesses
• Voluntary sector organisations, such as charities
• Public sector organisations such as schools, hospitals, and care homes

Who are:

• On existing fixed price contracts that were agreed on or after 1 December 2021
• Signing new fixed price contracts
• On deemed/out of contract or standard variable tariffs
• On flexible purchase or similar contracts

For further information and guidance on the scheme, please visit the government’s website: gov.uk/guidance/energy-bills-discount-scheme 

As with the EBRS, suppliers will automatically apply reductions to the invoices of all qualifying customers.

Eligible ETII customers can apply for additional support here: gov.uk/guidance/energy-bills-discount-scheme-energy-and-trade-intensive-industries-support

The discount applied will be in pence per kilowatt hour (p/kWh). The p/kWh government support for comparable contracts will be the same across the industry, but the absolute level of individual invoices will continue to vary across different contracts and tariffs.

The best place to get hold of some worked examples would be from the Department for Business, Energy and Industrial Strategy (BEIS) directly. The website can be accessed via the following link here: gov.uk/guidance/energy-bills-discount-scheme

It is possible that more examples could be made available once further details of the scheme are released, including the revised technical guides BEIS provided suppliers for the EBRS, which may include further information on the Energy and Trade Intensive Industries (ETII) scheme too.

A Standard Industrial Classification (SIC) code is a system used for classifying industries and providing Companies House with information about the nature of a business. For the purpose of the EBDS, the SIC code will be used to determine if you fall in the main scheme, or are on the ETII list for a higher level of support which you would have to apply for.

The EBDS will continue to apply to the same types of contracts as the EBRS. Also, as with the EBRS, there will be a difference to the calculation between product types according to government technical specifications. 

Current wholesale costs for summer/winter 2023 are below the thresholds to be applied for the EBDS, but where and in the event they exceed the price floor then any new contracts may be eligible for EBDS support.

This will vary significantly from contract to contract depending on time of signature and contract type.

This will be contract specific and dependent. For flexible customers, the effect of the scheme varies depending on the secured volumes.

The current BEIS guidance is that financial hedge aspect of the EBRS scheme will continue into EBDS. This is, however, subject to final review by the government, and we await the detail in the form of published Regulations.

MultiPurchase contracts will be treated in the same way they are today under the EBRS, but with the new price threshold and maximum discount values applied under the EBDS. This is with the exception of the ETII process. We are still awaiting for BEIS guidance on how to treat any meters that fall under this classification.

All non-domestic customers who fit the criteria (and signed a fixed price contract on or after 1 December 2021 or are otherwise on flexible or variable contracts) will qualify for the scheme.

Eligible sectors for the ETII discount have been outlined by the government and there is a link to eligible sectors on its website here: gov.uk/guidance/energy-bills-discount-scheme-energy-and-trade-intensive-industries-support

Yes, the absolute cap provides a reduction on wholesale costs and industry costs, although this is never split out.

The transition from the EBRS to the EBDS is not expected to modify how the CCL operates.

Unfortunately there are too many variables for us to be able to provide an equation which will work for all customers. However, if you are an existing npower Business Solutions (nBS) customer, please contact your usual nBS representative to discuss your specific concerns. 

Putting ETII to one side, the schemes are fairly similar. The levels of support on offer are significantly reduced for the EBDS, but beyond that it is a similar scheme to the EBRS.

The support is significantly reducing from 1 April 2023, and we expect that to continue for 12 months. We do not have any further information regarding future schemes beyond the EBDS, but will continue to work closely with the government and update our customers accordingly.

As with the EBRS scheme, the government will provide a discount on qualifying customers’ gas and electricity unit prices. 

Eligible non-domestic consumers will receive a per-unit discount to their energy invoices for energy consumed during the 12-month period from April 2023 to March 2024, subject to a maximum discount. 

The relative discount will be applied if wholesale prices are above a certain price threshold. For most non-domestic energy users in Great Britain, these maximum discounts have been set at:

• Electricity - £19.61/megawatt hour (MWh) with a price threshold of £302/MWh
• Gas - £6.97/MWh with a price threshold of £107/MWh

The discount is calculated as the difference between the wholesale price associated with an energy contract and the price threshold. The discount is phased in when the contract’s wholesale price exceeds the floor price, until the total discount per MWh reaches the maximum discount for that fuel.

Recognising that some non-domestic energy users in Great Britain are particularly vulnerable to high energy prices due to their energy intensive and trade exposure - referred to as Energy and Trade Intensive Industries (ETIIs) - these sectors will receive a higher level of support, subject to a maximum discount. This discount will only apply to 70% of energy consumption volumes. The maximum discounts and price threshold for these sectors are:

• Electricity - £89/MWh with a price threshold of £185/MWh
• Gas - £40/MWh with a price threshold of £99/MWh

For a full list of businesses in scope, please see the List of sectors eligible for the Energy and Trade Intensive Industries (“ETII”) scheme (PDF, 66.2 KB, 4 pages).

Yes, for fixed price contracts we are waiting for the government to publish the tables. We believe they will be published here: gov.uk/government/publications/energy-bill-relief-scheme-discounts-for-fixed-default-and-variable-contracts

Yes, this calculation is correct.

We are still waiting for further details from BEIS before we make changes to our invoicing system. It is likely that it will be a new line item for the scheme. However, this will be dependent on further clarification of the scheme rules from BEIS.

The discounted price for a customer’s volume will be to the wholesale price on the day we transact with our wholesale counterparts for such volume (ie. the date the contract is ‘locked in’ where the customer is on a fixed contract and, for flex and MultiPurchase customers, the date that a price is set for a specific volume under the customer’s supply contract with us). Please note that flexible customers will see a weighted average price (WAP) for all volume set.

The current discount for power is 1.96p/kWh. For gas, the max discount is £6.97/MWh, which is 0.69p/kWh.

The Energy and Trade Intensive Industries (ETII) group of businesses were identified via the EBRS review, as certain businesses were meeting thresholds for energy and trade intensity, in addition to sectors currently included in existing energy compensation and exemption schemes. 

Energy intensity was based on electricity and gas consumption as a percentage of a sector’s gross value added (GVA) using Office for National Statistics (ONS) data. Trade intensity was based on goods trade using ONS data. To qualify as an ETII sector, the sector must be in the top 20% of sectors by energy intensity across the UK, and fall in the top 40% of sectors by trade intensity across the UK. The ETII scheme is subject to consideration of state aid rules and BEIS is still formulating the rules around this.

Eligible sectors have been outlined by the government and there is a link to eligible sectors on its website here: gov.uk/guidance/energy-bills-discount-scheme-energy-and-trade-intensive-industries-support

If you believe that your organisation qualifies as an ETII, and may be entitled to the ETII discount as part of the EBDS, you will need to apply for the higher level of discount via the government’s digital portal, which is accessible on the government’s website here: gov.uk/guidance/energy-bills-discount-scheme-energy-and-trade-intensive-industries-support