Experts explain how business energy bill discount scheme will work

28/03/2023

BUSINESS comparison experts Bionic have produced a guide on the upcoming Energy Bills Discount Scheme, to explain how it will work and how it could help struggling businesses.

To give business owners some clarity, Les Roberts, content manager at Bionic, has answered these questions and more FAQ’s, including:        

  • Will the scheme save businesses money?
  • What if your contracted business rates are below the minimum threshold?

What is the Energy Bill Relief Scheme? “The EBDS is not a business energy price cap. The new scheme will offer businesses a discount on their gas and electricity unit rates (per kWh).”

How does the discount work? “EBDS will offer a discount on the wholesale portion of your unit rates, so long as they’re higher than a minimum threshold. The threshold price for Energy Trade Intensive Industries, like mining and manufacturing, is lower so the discount will be larger.”

Who is eligible for the scheme?  “The EBDS is available to non-domestic customers on fixed-price contracts that were agreed on or after December 1, 2021, as well as deemed and out-of-contract rates”

Do businesses need to apply for the EBDS? “Energy suppliers will automatically apply the reduction to the energy bill of eligible non-domestic customers. However Energy Trade Intensive Industries have to apply for the discount.”

Will the discount save businesses money? “Businesses with eligible energy contracts will save money but it is a considerable cut compared to the amount saved with the Energy Bill Relief Scheme.”

Estimates put total funding for the Energy Bill Relief Scheme is estimated at around £18 billion over the six months it ran. But funding for the Energy Bills Discount Scheme will be capped at £5.5 billion over the 12 months it will run. 

What if your contracted business energy rates are below the minimum threshold? “Businesses will not be eligible for a discount if the rates they’re paying are below the minimum threshold. 

The discount businesses get depends on how much higher than the threshold rates their rates are, and it is only applied when the wholesale part of the unit rate is higher than the government threshold rate of 10.7p per kWh of gas and 30.2p per kWh of electricity.

Ed Whitworth, Head of Energy Performance at Bionic, commented: 

“Although less generous than the Energy Bill Relief Scheme, it’s good news that the government’s new Energy Bill Discount Scheme will offer universal support to businesses faced with high energy bills. 

“Although available to all non-domestic customers on contracted, deemed, and out-of-contract rates, it’s still worth comparing energy quotes and locking in your rates. Fixing your rates will guarantee bill stability in what’s still an uncertain market by locking in a consistent price for your energy. And, as with the Energy Bill Relief Scheme, the lower your contracted rates, the lower your discounted rates will be.”

Please see the full guide at the link above, which includes a breakdown of how the EBDS could affect gas rates, an explanation of how the discount works for Energy Trade Intensive Industries and a video of Les explaining the scheme

The full guide can be found here: https://bionic.co.uk/business-energy/guides/energy-bills-discount-scheme-explained/?r=enbi

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