Many businesses that had not opted for fixed energy contracts during the 2022 winter months were now faced with a challenge. They could either decide to downsize their business, adjust their business model or close their doors for good. However, to protect businesses, the UK Government offered support to non-domestic energy users in the form of an energy price cap as well as The Energy Price Guarantee.
The Energy Price Guarantee applies to all households in Great Britain and Northern Ireland. It will restrict the rising wholesale cost for domestic customers, saving households roughly £1,000 a year. This is in addition to the £400 energy bills discount.
The Energy Bill Relief Scheme
With a total of £18bn, the UK Government along with Northern Ireland have been offering support to businesses and other non-domestic customers, such as local authorities and charities, in the form of subsidising their energy bill. This was known as the Energy Bill Relief Scheme. The Energy Bill Relief Scheme acted as a price cap and was effective over the winter period of 2022/2023.
The scheme applies to fixed-price contracts that were signed on or after 1 April 2022. This price cap ensured that discounts were automatic and were first viewed on energy bills in October 2022. Another added benefit was that businesses and other non-domestic energy customers did not have to pay a green levy anymore.
The Energy Bills Discount Scheme
Effective 1 April 2023, a new scheme has been implemented with more support, known as the Energy Bills Discount Scheme. This scheme will run up until 31 March 2024.
Non-domestic customers are now eligible for a discount on their costs per unit on their energy bills. This is however, subject to a maximum discount price and can only be utilised if the unit rate of their per megawatt-hour (MWh) is higher than the wholesale costs.
Available discounts under the Energy Bills Discount Scheme
- Electricity: a discount of £19.61 per MWh, with a wholesale price threshold of £302 per MWh.
- Gas: a maximum discount of £6.97 per MWh, with a wholesale price threshold of £107 per MWh.
An energy supplier will offer the above discount directly to their customers. This means that businesses will not need to apply for the Energy Bills Discount Scheme.
Discounts for energy and trade-intensive businesses
Energy Trade Intensive Industries are larger businesses with high utilities and energy consumption. Examples of these businesses would be the mining and manufacturing industries. These companies will receive a bigger reduction of their energy bill than other businesses and the threshold price will be lower. But, the discount will only pertain to 70% of a business’s total energy bill.
The discount is broken down as follows:
- Electricity – £89.1 per MWh with a £185 per MWh threshold
- Gas – £40 per MWh with a £99 per MWh threshold
Here is a full list of eligible Energy and Trade-Intensive sectors.