Energy Bill Discount Scheme: A New Approach to Business Support Starting April 2023
Say goodbye to the old financial aid and hello to a fresh scheme that offers savings on wholesale energy prices instead of a fixed cap. The Energy Bill Discount Scheme (EBDS) steps in when wholesale costs rise, offering a lifeline to businesses during challenging times.
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What Does This Mean for Small Businesses?
If wholesale prices go above a certain price threshold, you’ll get a discount. The scheme will gradually increase the discount as the wholesale energy prices rise above this floor price, up to a maximum cap. This means that energy prices can still change, but locking in a fixed-rate deal at a good price can help you maximise your savings.
The size of your discount will vary depending on your contract and the wholesale energy prices. This could make it difficult for small business owners to predict exactly how much they’ll save.
Here’s an illustrative table to show how much businesses of different sizes and types could save:
|Example||Business Type||Annual Gas Usage (kWh)||Annual Electricity Usage (kWh)||Estimated Annual Discount|
|2||Small Retail Shop||24,000||12,000||£402.60|
|3||Medium-sixed Manufacturing Business||1,600,000||200,000||£687,120|
(Note: 1 MWh equals 1,000 kWh. Source: GOV.UK)
Why Are Business Energy Support Levels Changing?
Chancellor Jeremy Hunt has suggested that the cost of the current Energy Bill Relief Scheme, which ends in March, is too high.
Although wholesale energy prices are lower than they were before the Russian invasion, they’re still significantly above the long-term average. However, the good news is that wholesale energy prices have started to fall thanks to a mild European winter.