Energy Bill Discount Scheme Summary

Non-Domestic Energy Bill Discount Scheme Summary

Based on government information published 10 January 2023

What is the new Energy Bill Discount Scheme?

In relation to the previous Energy Bill Relief Scheme, which will end of 31 March 2023, PASCHALi understands that the revised level of support provided by the new Energy Bill Discount Scheme is significantly less in comparison. The previous Energy Bill Relief Scheme provided organisations with bill reductions of around 40%. The new Energy Bill Discount Scheme will instead provide very small reductions, giving a discount of circa 3% on energy bills (compared to 40% previously). See our demonstrative examples further below for context.

On face value, the new scheme may seem beneficial to organisations, however in the current energy crisis, the level of support offered is actually very little.

In Summary:

• A discount will be applied to both gas and electricity bills for non-domestic organisations, provided the supply's wholesale price is above a certain threshold:
• For the wholesale price of electricity, this threshold is 30.2 pence per kilowatt hour.
• For the wholesale price of gas, this threshold is 10.7 pence per kilowatt hour.

• If wholesale prices rise above this threshold, you will be eligible for the following discounts on your bills:
• For electricity, the maximum discount is 1.961 pence per kilowatt hour.
• For gas, the maximum discount is just below 0.697 pence per kilowatt hour.

• Changes will apply to fixed contracts agreed on or after 1 December 2021. Those on newly-signed fixed contracts and out-of-contract variable tariffs are also eligible for the scheme.

• The scheme will last for 12 months, from 1st April 2023 to 31 March 2024.

• The scheme will apply to all non-domestic organisations, including businesses, schools, hospitals, churches etc.

• The basic scheme will be applied to all organisations, you do not need to contact suppliers as reductions will be automatically applied to bills from 1st April 2023.

• Organisations in energy and trade intensive industries (ETIIs) are eligible to receive a higher level of support, however these organisations will need to submit an application to the government (further details on this will be published by the government soon) and are subject to different wholesale price thresholds:
• For the wholesale price of electricity, this threshold is 18.5 pence per kilowatt hour.
• For the wholesale price of gas, this threshold is 9.9 pence per kilowatt hour.

• If wholesale prices rise above this threshold, approved ETII organisations will be eligible for the following discounts:
• For ETII electricity, the maximum discount is 8.9 pence per kilowatt hour.
• For ETII gas, the maximum discount is 4 pence per kilowatt hour.

• A list of eligible ETII sectors can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1128033/230104_ETII_List_for_gov.uk.pdf

Demonstrative examples based on examples provided by the UK Government:

• Pub (Fixed Contract):

A pub uses 4,000 kWh of electricity and 16,000 kWh of gas a month. They signed a fixed contract in August 2022, giving them a current monthly energy bill of around £7,000. Under the Energy Bill Discount Scheme, they could receive a maximum discount of £189.96 per month (2.7%).

• School (Fixed Contract):

A school uses 10,000 kWh of electricity and 22,000 kWh of gas a month. They signed a fixed contract in July 2022, giving them a current monthly energy bill of around £10,000. Under the Energy Bill Discount Scheme, they could receive a maximum discount of £349.44 per month (3.5%).

• ETII manufacturing business (Variable Tariff):

An ETII manufacturing business has successfully applied to the government's higher level of support for ETIIs. The business uses 200,000 kWh of electricity and 1,600,000 kWh of gas each month. The business is on variable tariff, giving them a current monthly energy bill of around £560,000. As they are in an energy and trade intensive industry (ETII), they are eligible for a higher level of support. Under the Energy Bill Discount Scheme for ETII businesses, they could receive a maximum discount of £81,800 per month (14.6%).

• Small retail shop (Variable Tariff):

A small retail shop uses around 1,000 kWh of electricity and 2,000 kWh of gas each month. They are on a variable contract, giving them a current monthly energy bill of around £1,300 per month. Under the Energy Bill Discount Scheme, they could receive a maximum discount of £33.55 per month (2.6%).

If you need further information or support call PASCHALi on 0113 400 1101 or email us at info@paschali.co.uk

© PASCHALi Limited 2022 (Updated 18 October 2022)

Ref: https://www.gov.uk/guidance/energy-bills-discount-scheme