Business Energy Bill Discount Scheme for non-domestic customers
The Energy Bill Discount Scheme (EBDS) was implemented on 1st April 2023 and replaces the existing Energy Bill Relief Scheme (EBRS) that ended on 31st March 2023.
The EBDS will run from 1st April 2023 until 31st March 2024.
Under the EBDS, the baseline level of government support is lower than it was under the EBRS. This means many businesses will no longer be eligible for a discount due to the current wholesale electricity price being lower than it was when the EBRS was introduced, and where support is provided, it is likely to be significantly reduced.
Details and eligibility criteria are available on the gov.co.uk website here.
Energy and Trade Intensive Industries (ETIIs) and heat network customers must apply for the additional level of support within 90 days of the EBDS opening i.e., by 30th June 2023. A portal to submit applications will be available on the gov.co.uk website from early April.
About the Scheme
The EBDS is made up of 3 different parts:
- The baseline discount will provide some support with energy bills for eligible non-domestic customers in Great Britain and Northern Ireland which will be applied automatically.
- The ETII discount will provide a higher level of support to businesses and organisations in eligible sectors. Customers must register to receive this support.
- The heat network discount will provide a higher level of support to heat networks with domestic customers. Customers must register to receive this support.
Squeaky will begin to apply the discount during May 2023.
Customers will receive a per-unit discount to energy bills during the 12-month period from April 2023 to March 2024.This is subject to a maximum discount.
The discount will be applied if wholesale energy prices are above a certain price threshold. For most non-domestic energy users in Great Britain and Northern Ireland, these threshold prices and maximum discounts have been set at:
- Maximum discount - 1.961 per kWh
- Price threshold - 30.2 per kWh.
Baseline Discount Calculation
- The discount is calculated as the difference between the relevant wholesale price associated with an energy contract and the price threshold.
- If the wholesale price is greater than the price threshold, a discount will be applied which is subject to the maximum discount.
- If the wholesale price is lower than the price threshold a discount will not be applied.
- The discount will be reduced if the contract’s wholesale price exceeds the threshold price by less than the maximum discount.
- The discount is only applied to the wholesale element of the invoice.
Below are some examples showing how the discount is calculated:
|Wholesale Price||Price Threshold||Maximum Discount||Eligible Discount|
|20 p/kWh||30.2 p/kWh||1.961 p/kWh||0 p/kWh|
|35 p/kWh||30.2 p/kWh||1.961 p/kWh||1.961 p/kWh|
|45 p/kWh||30.2 p/kWh||1.961 p/kWh||1.961 p/kWh|
|31.2 p/kWh||30.2 p/kWh||1.961 p/kWh||1.0 p/kWh|
Reference Wholesale Price (RWP)
The RWP which is used to determine if a customer is eligible for a discount is set and published by the Government.
- For fixed price contracts, the RWP is based on the contract signature date.
- For variable tariffs (including out of contract and deemed), the RWP will be published by the Government. It is expected the RWP will be reviewed and updated quarterly to reflect the wholesale cost of electricity.
- For flexible contracts, the RWP is calculated as the monthly commodity rate. The government have published a full set of wholesale prices and associated discounts which can be found here.
Energy and Trade Intensive Industries
Recognising that some energy users are exposed to high energy prices due to their high energy usage, ETII sectors will receive a higher level of discount, subject to a maximum discount.
The higher level of discount will apply to 70% of the energy volume whilst the remaining 30% will be calculated using the baseline methodology above.
The thresholds and maximum discount levels for ETII customers are:
- Threshold has been set at 18.5 p/kWh for electricity
- Maximum discount is set at 8.91 p/kWh
For customers to be eligible for a higher level of support, customers must meet the following criteria:
- Be on a non-domestic contract from a licensed energy supplier.
- Be on an existing fixed price contract agreed on or after 1 December 2021, signing a new fixed contract, a deemed contract, on a flexible purchase (or similar) contract, or a variable ‘Day Ahead Index’ tariff (Northern Ireland only).
- Operate primarily within an eligible sector (see link below for a list of eligible sectors). Operating primarily within an eligible sector means that 50% or more of the organisation's revenue for the financial year 2021/22 fell within an eligible sector.
- The organisation consuming the energy will need to submit the application for the higher discount.
- For Local Authority entities, eligibility will be determined at a premise level. Where there are no relevant accounts, the Local Authority will be required to declare that at least 50% of the space is taken up by operations within an eligible sector.
Eligible organisations will need to apply for the higher support via a digital portal that will open on the EBDS gov.uk page in early April 2023.
Organisations will need to provide information about their organisation, energy supplier, relevant energy supply contract(s) references and applicable metre point references.
The government will determine eligibility based on the application. In some instances, further validation of eligibility may be required meaning that the organisation will be asked for additional information. The government will use Companies House data, eligibility for other ETII compensation schemes and other data sources to make the initial determination.
Energy suppliers will not be responsible for identifying ETII customers and will not be able to apply the ETII discount rate until eligibility has been confirmed by the Department for Energy Security and Net Zero through this process.
The government has published a list of eligible Standard Industrial Classification (SIC) codes of economic activities that will fall into the ETII category. A link for the full list of eligible SIC codes can be found here.
How will the discount be applied?
In a similar way to the EBRS, the discount will be applied to invoices automatically by Squeaky. Customers eligible to receive the discounted price will see it as a separate line item on each invoice. If you are not eligible for support, your invoice will look the same as it does today i.e. with no additional line item displaying the discount.
If you have any questions relating to the EBDS, please don’t hesitate to contact us at firstname.lastname@example.org.