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15 May 2023
The Energy Bill Relief Scheme (EBRS) came as a major relief for businesses struggling with soaring energy costs, providing both economic support and much-needed certainty. From 1 April 2023, the scheme as we know it is changing – so what does that mean for you?
Current data shows that wholesale gas prices have fallen to levels not seen since early 2021 – nearly half of what they were when the EBRS initiative was announced. While this is promising news, prices are still significantly higher than they were. And with the current EBRS coming to an end on 31 March 2023, many businesses will be wondering what – if any – support will be offered in its absence.
Following an announcement in the House of Commons on 9 January, future support for businesses will come into effect as of 1 April 2023. But what does that support entail and how will it help businesses deal with the cost of their energy bills?
Here, we’ve detailed all the latest developments. But if you’re looking for something specific, you can choose from one of the options below.
The good news is that the end of the EBRS does not mean the sudden stop in energy support that businesses were fearing.
EBRS will be replaced with the newly announced Energy Bills Discount Scheme (EBDS), a more scaled-back version of its predecessor. Ministers have said the new scheme will “strike a balance between supporting businesses over the next 12 months and limit taxpayers’ exposure to volatile energy markets”.
EDRS will run for 12 months from 1 April 2023 to 31 March 2024. Compared to the EBRS – which was worth £18 billion over six months – the new scheme will be capped at £5.5 billion.
Chancellor Jeremy Hunt has also promised “a substantially higher level of support” under the new scheme for more energy-intensive industries, such as manufacturers and producers of steel, glass and ceramics.
Like the EBRS, the EBDS will be available to everyone on a non-domestic contract, including:
To be eligible, these entities will also be:
The discount will automatically be applied by suppliers to the bills for all non-domestic consumers that are eligible. Those in energy-intensive industries will have to apply for the highest level of support, and details on how to go about that will be shared soon.
Like with EBRS, the intention of the new discount scheme is to minimise the impact of market volatility by setting a base wholesale price – or ‘price threshold’ – for all eligible non-domestic customers.
When contracted wholesale prices exceed this price threshold, a per unit discount will be applied to reduce the wholesale price in line with the defined threshold – up to a maximum discount – for all energy consumed during the applicable 12-month period.
The biggest difference between EBRS and EBDS is that the price threshold will be higher, and the maximum discount will be lower.
For most non-domestic energy users in the UK and Northern Ireland, the price threshold and maximum discounts for EBDS have been set at:
The government will compensate suppliers for the reduction in wholesale gas and electricity unit prices that they’re passing on to non-domestic customers.
As noted above, eligible energy-intensive industries will receive a higher level of support, also subject to a maximum discount. The maximum discounts and prices thresholds for these sectors are:
The level of support for each organisation will vary depending on the type and date of contract.
Based on recent averages of forward wholesale prices, let’s take a look at some hypothetical examples of the scheme in theory.
|
Type of business |
Monthly electricity (MWh) |
Monthly gas (MWh) |
Approx. discount (over 12-month period) |
|
Pub |
4 |
16 |
£2,280 |
|
Small retail outlet |
1 |
2 |
£403 |
|
Medium-sized manufacturer |
200 |
1,600 |
£687,120 |
Source: GOV.UK
Somewhat unsurprisingly, reaction to the scheme has already been mixed. While the Confederation of British Industry welcomed the news, saying it would “provide respite for many firms”, the Federation of Small Business (FSB) called the scheme “a huge disappointment”.
Nevertheless, the Treasury has defended its decision, stating that the EBRS’s £18 billion is equivalent to an increase of around 3p on people’s income tax. And with signs suggesting that wholesale gas prices could be heading in the right direction, it’s hoped the level of support set to be offered from 1 April will provide enough of a cushion to help businesses through the next 12 months.
Closer to home, our Head of Sales, Dan Sullivan, had this to say about the future of the energy relief scheme and what the changes could mean for our customers:
While we still expect some volatility in the market over the next year, it’s positive that the Government has recognised the longer-term impact for businesses and that they have put measures in place to provide continued support, just as they’ve done for the domestic market. Here at SEFE Energy we will continue to work with BEIS and the Government to provide support for customers.
At SEFE Energy, we understand these are uncertain times for our customers. We’re doing everything we can to reduce disruption, provide support and help those most in need of financial assistance. To learn more, visit our dedicated energy crisis support hub or contact the team today on 0161 837 3395.