After a long period of uncertainty for many UK businesses, the government made a much-anticipated announcement on the 10th of January regarding energy support when the EBRS comes to an end.
The announcement committed to continuing some level of relief for businesses in order to help them manage their energy costs and continue operations during challenging times. Although this assures businesses that they will have support with their energy bills, the level of support is considerably lower.
Under the Energy Discount Scheme, businesses will be eligible for a 12-month discount on their energy bills. Support will be automatically added to bills from the 1st of April 2023, when the EBRS comes to an end and will last until the 31st of March 2024.
What is the Energy Bill Discount Scheme
On 1st April 2023, the Energy Bill Discount Scheme will kick off and run until 31st March 2024. Unlike the EBRS, this new discount scheme won't apply a price cap; instead, it will provide non-domestic customers with a discount on their energy bills if they have signed their energy contracts after 1st December 2022.
This innovative approach to tackling high energy costs means all businesses, regardless of size or sector, can take advantage of the savings. The scheme has the potential to significantly reduce the running costs for many organizations, allowing them to reinvest money in their operations and ultimately benefit the wider community.
The EBDS will also only be applied to energy contracts once they have gone over a certain price which is outlined below:
- For electricity if the wholesale portion of the bill rises over 30.2p/kWh then a maximum of 1.96p/kWh discount.
- For gas if the wholesale price rises over 10.7p/kWh then a maximum discount of 0.697p/kWh will be applied.
When energy prices reach the threshold price above this discount will be automatically added to your energy bills. You do not need to apply or sign up to receive support, please be aware of energy scams that may tell you otherwise.
Support for Energy Intensive businesses.
The UK government have recently taken steps to recognize the vulnerability of some British businesses when it comes to higher energy prices. The industries most affected are those that are both energy intensive and trade exposed, often referred to as Energy and Trade Intensive Industries (ETIIs).
These companies are vulnerable due their reliance on imported products that can be expensive to produce or import, and their high electricity bills, which in some cases are a large portion of their overall operating costs.
The government has taken steps to ensure that these businesses are adequately protected by backing various schemes that aim to reduce energy consumption and promote sustainable business practices. For these ETIIs this provides vital stability, allowing them to plan while being aware that they won’t be hit with sudden price increases due to market volatility.
To make sure these industries are not too damaged by market increases they will receive a higher level of support. The maximum discount 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
How will this affect my business?
The latest government-imposed energy discount has put many businesses in an increasingly precarious financial position, making them more vulnerable to market shifts in the prices of wholesale energy. This means that businesses need to think ahead and get creative in order to protect themselves against price hikes in their energy bills.
Typically, this would require additional cost savings elsewhere so that money can be reallocated for such risks and ensure that your business survives the stormy waters ahead. Unfortunately, with the lack of support from initiatives like the immediate relief scheme, businesses have no other option than to take proactive steps if they are to remain competitive and survive.
Stay on top of gas contracts.
To make sure you stay on top of your business energy contracts you should be comparing prices and suppliers before your renewal is coming up. At Online Energy we can give you prices from the UK’s best energy suppliers. Get started comparing gas and electricity prices today!