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The new business Energy Bills Discount Scheme will replace the current Energy Bill Relief Scheme which is coming to an end on 31 March 2023. The new scheme will offer support to eligible non-domestic energy customers, including UK businesses, the voluntary sector - such as charities - and the public sector - for example, schools and hospitals - from 1 April 2023 to 31 March 2024.
The new scheme has been designed to help support businesses over the next 12 months whilst at the same time limiting the taxpayer’s exposure to volatile energy markets. A cap has been set at £5.5 billion based on estimated volumes.
Under the new scheme, eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill with a price threshold of £107 per MWh and a unit discount of up to £19.61/MWh applied to their electricity bill with a price threshold of £302 per MWh. The relative discount will only be applied if wholesale prices are above the stated price thresholds.
The government has also confirmed that a substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries. These businesses will receive a gas and electricity bill discount based on a supported price which will be capped by a maximum unit discount of £40/MWh for gas with a price threshold of £99 per MWh and £89/MWh for electricity with a price threshold of £185 per MWh. This discount will only apply to 70% of energy volumes.
As with the original scheme, suppliers will automatically apply reductions to the bills of all eligible non-domestic customers.