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What Is The Energy Bill Discount Scheme?

The Energy Bills Discount is part of a series of grants including the Energy Bills Support Scheme and the Alternative Fuel Payment. It’s a financial scheme provided by the UK government to help businesses cope with rising energy bills.

As there have been several similar schemes of late, it can be quite confusing to tell them apart. At Business Energy Comparison, we’ve put together this guide to get you fully up to speed.

We’re going to take a look at exactly what the Energy Bills Discount Scheme is. We’ll also cover how it works and show you which businesses are eligible. Plus, we’ll discuss how it differs from other UK government schemes.

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How Does the EBDS Discount Work?

The Energy Bills Discount Scheme (EBDS) was brought in by the UK government on April 1, 2023. The scheme replaces the Energy Bill Relief Scheme (EBRS) which was in place from October 1st, 2022.

The scheme aims to lower businesses’ energy rate by giving them discounts on their business electricity and gas unit rates. So, businesses will pay less to their energy suppliers for each unit of energy they use, which is measured in kilowatt-hours (kWh).

Who’s Eligible for the Energy Bills Discount Scheme?

To be eligible, you must be a non-domestic customer and have agreed to a fixed-price contract on December 1, 2021, or after this date. You’re also eligible if you’re paying deemed or out-of-contract rates.

If you are using these rates, it’s best to compare business energy suppliers and find a good fixed-rate contract. This means you’ll be able to find an energy supplier that’s suitable for your business and you’ll save money on your energy bills.

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Will the Energy Bills Discount Scheme Save Your Business Money?

So, you know what the Energy Bills Discount Scheme is. But how does it actually work, and will it save you money? Let’s take a look.

If your unit rates are higher than the minimum threshold set by the government, then the wholesale portion of your rates will be discounted. The threshold is lower for businesses that have very high levels of energy consumption which means they will receive a higher discount than other businesses.

Still, the discount should be helpful for most businesses and help to reduce the amount that goes out of your business bank account via monthly direct debit.

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How EBDS Could Affect Business Electricity Rates

Electricity: The price threshold is 30.20p per kWh. You get a discount of £0.01961 on the difference between the threshold and the wholesale element of the unit rate that you pay to your electricity supplier.

How EBDS Could Affect Business Gas Rates

Gas: The price threshold is 10.70p per kWh. You get a maximum discount of £0.00697 on the difference between the threshold and the wholesale element of the unit rate that you pay to your energy supplier.

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What If Your Contracted Business Energy Rates Are Below the Minimum Threshold?

If your energy costs are lower than the threshold for business gas or electricity, then you won’t be eligible for the discounts. If you’re unsure exactly what the unit rates are for your business energy account, then contact your energy supplier.

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How Does the Energy Bills Discount Scheme Impact Energy and Trade Intensive Industries?

For businesses that operate within Energy Trade Intensive Industries, the discounts are different. This includes businesses in the manufacturing and mining industries. Here’s a breakdown of how it works for these types of businesses:

  • Electricity: The threshold is 18.5p per kWh. You get an 8.9p discount on the difference between the threshold and the unit rate you pay to your electricity supplier.
  • Gas: The threshold is 9.9p per kWh. You get a 4.0p discount on the difference between the threshold and the unit rate that you pay to your energy supplier.

One thing to bear in mind is that these discounts only apply to 70% of your business’s energy volumes. For the remaining 30%, you’ll pay the full rates.

The majority of businesses don’t need to apply for these discounts. The discounts are automatically applied by energy suppliers for businesses that are eligible. However, if your business is classed as being in the Energy Trade Intensive Industries, you will need to apply.

If you think your large business is paying too much for its energy, then you should compare large business energy rates. You’ll be able to compare the best deals on the market and reduce the amount that goes out of your bank account each month.

How Will the EBDS Benefit Your Business?

The benefit of this support scheme is that it reduces the amount of money businesses have to spend on their energy bills. In turn, this should stop price increases being handed onto other consumers – and hopefully help to ease the cost of living crisis.

Yet, the savings that businesses will make on their bills is less than the savings that were provided by the Energy Bill Relief Scheme. This is because the government has cut funding significantly.

The total funding for the Energy Bill Relief Scheme was estimated to be about £18 billion. The funding for the Energy Bills Discount Scheme has a cap of £5.5 billion.

Still, the scheme will help your business to save money on its business utilities.

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How is the Energy Bills Support Scheme (EBSS) Different to the Energy Bills Discount Scheme (EBDS)?

The Energy Bills Discount Scheme and the Energy Bills Support Scheme are two different things. One of them was aimed at supporting domestic energy consumers and the other is aimed at supporting business energy consumers.

  • Energy Bills Discount Scheme: It has replaced the Energy Bill Relief Scheme and provides discounts to business energy users.
  • Energy Bills Support Scheme: The Energy Bills Support Scheme was in place between October 2022 and March 2023. It gave £400 in discounts each month to domestic energy users. The money was paid directly into a customer’s energy account by monthly direct debit.

What is the Energy Price Cap?

The energy price cap limits the amount that domestic energy users pay for their energy. The UK government replaced it with the Energy Price Guarantee in October 2022.

Unfortunately, there isn’t an energy price cap for businesses in the UK. This is a fairly common misconception among business owners. The Energy Bill Discount Scheme is a discount on the unit rates that a business pays to its gas and electricity supplier. This isn’t a price cap.

The confusion arises from the fact that domestic energy users do have a price cap on their energy costs.

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Compare Business Energy Rates With Business Energy Comparison

Although the Energy Bills Discount Scheme won’t save businesses a huge amount of money, it’s certainly helpful. It’s designed to partly protect businesses from the ongoing energy price crisis and help them to save some money on their energy bills.

Another way for your business to reduce its energy bills is to use a broker or consultant to compare deals from different suppliers. This way, you can find a contract that’s perfect for the needs of your business.

One of the most effective ways for your business to save money on its energy bills is to compare rates from different suppliers.

If you’re on a contract that’s not right for your business, then you’re paying too much for your energy. Compare deals with Business Energy Comparison and start saving today!

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Frequently Asked Questions

Is it best to fix my business energy rates?

Fixing your business energy rates can be a good way to save money in the long term. It means that the amount you pay by monthly direct debit will be the same for the duration of the contract. This protects you from energy price increases in the future.

However, as energy prices are currently so high, it might not be the best time to do this. If you fix your energy account rates now, you may end up paying too much for your energy when the prices start to fall.

Are businesses eligible for the alternative fuel payment?

Yes, many businesses that are off-grid are eligible for the government’s Non-Domestic Alternative Fuel Payment Scheme. This will take the form of a £150 payment to businesses that qualify for the scheme.