The Energy Bills Discount Scheme – a guide for businesses

Over the last couple of years, there have been periods when energy costs have soared to eye-watering levels. War in Ukraine saw Russia switch off gas supplies to Europe, threatening fuel security for many countries. At times, the wholesale price of gas hit new highs and some nations are now recommissioning coal-fired and nuclear plants. In the UK, the government has also lifted the moratorium on fracking and given the green light to new North Sea oil and gas exploration.

When prices were at their highest, many businesses faced huge hikes in their energy bills. One much publicised example concerned celebrity chef Tom Kerridge, who saw the bill for one of his restaurants shoot up from £60,000 per year to £420,000 – an increase of 600%.

To help out, the government introduced an Energy Bill Relief Scheme for businesses. Essentially, this capped wholesale energy prices between 1st October 2022 and 31st March 2023. This meant the maximum businesses could be charged for gas was £75 per MWh, and for electricity £211 per MWh.

However, this scheme has now been replaced by the Energy Bills Discount Scheme. In this post, we take a look at how it works and at what help you can expect.

What is the Energy Bills Discount Scheme?

The Energy Bills Discount Scheme began on 1st April 2023. It will run until 31st March 2024.

The scheme has three main parts. These are:

1. A baseline discount for eligible non-domestic customers. This is applied automatically to your bills, so there’s no need to apply.
2. An Energy and Trade Intensive Industries (ETII) discount. If your business is eligible, you need to apply for this higher level of support. To be eligible, you need to get at least 50% of your revenue from UK-based activity in the sectors listed here.
3. A Heat Network Discount. Again, this is a higher level of support. It is for heat networks with domestic end consumers. You also need to apply for this discount.

If you haven’t yet applied for the ETII discount or the Heat Network Discount, you may only do so if your business became eligible within the last 90 days.

Who gets the baseline discount?

The baseline discount is available to anyone with a non-domestic energy supply contract. This includes businesses, voluntary sector organisations and public sector entities such as schools and hospitals.

How much is the Energy Bills Discount Scheme baseline discount?

The baseline discount is applied if energy wholesale prices are above a certain threshold. The threshold prices and maximum discounts are:

• Electricity. A discount of up to £19.61/MWh per unit above a threshold level of £302 per MWh.
• Gas. A discount of up to £6.97/MWh per unit above a threshold level of £107 per MWh.

It’s important to note that the discount only applies to the wholesale element of your bill. It does not affect things like network charges or operating costs. For this reason, it’s still a good idea to compare suppliers to get the best deal.

Where can I find details of current discounts?

You can find daily discount rates on this page.

Where can I find out more about the Energy Bills Discount Scheme?

If you’d like to find out more about the Energy Bills Discount Scheme, the government has published official guidance on this page. You can also learn more about the scheme rules and methodology here.

Finally, if you are worried about energy costs and would like to review your business finances, please get in touch with your THP account manager. Our tax planning service may be of particular use to you.