The UK government has announced a new “Energy Bills Discount Scheme” for UK businesses, charities, and the public sector, set to begin in April. The scheme aims to provide a discount on high energy costs to give businesses certainty while limiting taxpayers’ exposure to volatile energy markets. Businesses in sectors with particularly high levels of energy use and trade intensity will receive a higher level of support.
Previous Energy Bills Discount for Non-Domestic Users
The government provided an unprecedented package of support for non-domestic users through this winter, worth £18 billion according to figures certified by the Office for Budget Responsibility (OBR) at the Autumn Statement. This is equivalent to the cost of an increase of around three pence on people’s income tax. The government has been clear that such levels of this support, unprecedented in its nature and huge scale, were time-limited and intended as a bridge to allow businesses to adapt.
Latest Data on Wholesale Energy Prices
The latest data shows wholesale gas prices have now fallen to levels just before Putin’s invasion of Ukraine and have almost halved since the current scheme was announced. The new scheme therefore strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion. This provides long term certainty for businesses and reflects how the scale of the challenge has changed since September last year.
Energy Bills Discount for Energy and Trade Intensive Sectors
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. Businesses in scope will receive a gas and electricity bill discount based on a supported price which will be capped by a maximum unit discount of £40.0/MWh for gas and £89.1/MWh for electricity.
Energy Bills Discount for Eligible Non-Domestic Customers
From 1 April 2023 to 31 March 2024, 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 and a unit discount of up to £19.61/MWh applied to their electricity bill, except for those benefitting from lower energy prices.
Poem on Energy Bills Discount By Uk Government
"Energy Relief: A Poem on the Government's New Discount Scheme" Energy costs, a burden on our minds, A constant worry for businesses to find, But now the government, with a helping hand, Announces a scheme, to help us all stand. The Energy Bills Discount Scheme, for all to see, A relief for those in need, it will be, From April, a discount on high energy bills, To give businesses certainty and taxpayers' ills. For those in sectors with high energy use, A higher level of support, they will not lose, Manufacturing industries, with energy so grand, Will see a substantial boost, throughout the land. Eligible non-domestic customers too, Will see discounts applied, for their bills to reduce, From April to March, the scheme will run, Providing relief and helping businesses to come undone. The government's support, a bridge to adapt, To help businesses through, this volatile market to have a stab, A balance struck, between support and cost, The Energy Bills Discount Scheme, a victory for all, almost.
In conclusion, the new Energy Bills Discount Scheme aims to provide support for UK businesses, charities, and the public sector by offering discounts on high energy bills. The scheme strikes a balance between supporting businesses and limiting taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion. Businesses in energy and trade intensive sectors will receive a higher level of support, while eligible non-domestic customers will see discounts automatically applied to their bills. The Chancellor of the Exchequer, Jeremy Hunt, has also written to Ofgem asking for an update on whether further action is needed to ensure the market is working for businesses.
List of sectors eligible for the Energy and Trade Intensive Industries (“ETII”) scheme
Chancellor letter to Jonathon Brearley – Ofgem (PDF, 66.4 KB, 2 pages)