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Published 10 May 2023
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How the Business Energy Bills Discount Scheme Works

The Energy Bills Discount Scheme isn’t a business energy price cap, but it does offer businesses money off their energy bills. We explain how the scheme works.

There is no business energy price cap, so there is no maximum on what you can pay per unit for gas or electricity as a non-domestic energy customer.

If your business has been hit by soaring energy bills this may not seem like great news. However, the UK government is offering some support through its Energy Bills Discount Scheme (EBDS). The EBDS is designed to reduce business energy bills through an automatic rebate, provided you are paying above a specific amount. 

What is the Energy Bills Discount Scheme?

The Energy Bills Discount Scheme (EBDS) offers businesses and other non-domestic customers money off the per-unit costs of gas and electricity bills, once they reach a threshold in what they are paying. 

The scheme, which launched on 1 April 2023 and runs until 31 March 2024, is for business customers in Great Britain and Northern Ireland. The EBDS offers more scaled-back support for businesses facing high energy bills than the Energy Bill Relief Scheme it replaces. 

Does the energy price cap apply to businesses?

There is no business energy price cap or price guarantee for business gas and electricity. The EBDS offers eligible businesses money off their energy bills, rather than setting a maximum price a supplier can charge for their default tariff. 

This is in contrast to the price cap and guarantee in place for domestic energy customers, which limits how much suppliers can charge per unit of energy.

Can I get the Energy Bills Discount Scheme?

To be eligible for the EBDS, you need to be a business or in the voluntary or public sector (such as a charity, school or hospital). 

You must also be on one of the following contracts or tariffs:

  • an existing fixed-price energy contract from 1 December 2021
  • a deemed, out-of-contract or standard variable tariff
  • a flexible purchase, or similar, contract
  • on a variable ‘Day Ahead Index’ (DAI) tariff (Northern Ireland only)

There is a minimum unit cost you must be paying to receive the support. If your unit costs are below £302 per megawatt hour (MWh) for electricity, or £107 per MWh for gas, you won’t receive a discount. 

What is the maximum discount?

The maximum discount you can get and the least you must be paying to get the support is as follows:

Maximum discount Price threshold 
Electricity£19.61 per MWh£302 per MWh
Gas£6.97 per MWh£107 per MWh

Energy-intensive businesses

Energy and Trade Intensive Industries (ETII), such as manufacturing, tend to use a lot of energy and have high energy costs. So ETIIs get a higher per unit cost discount and have a lower price threshold, as follows:

Maximum discount Price threshold
Electricity£89 per MWh£185 per MWh
Gas£40 per MWh£99 per MWh

You’ll need to register to get the higher level of ETII support. The government has published a list of eligible ETII industries

How do I get the discount?

If you’re eligible for the EBDS, your discount will be automatically applied to your energy bills by your supplier. It will be in pence per kilowatt hour (p/kWh) and will kick in when the wholesale price goes above the threshold until the total discount reaches the maximum for that fuel. You don’t need to do anything other than carry on paying your bill as usual. 

Remember, this is a discount on the difference between the wholesale unit rate you pay to your supplier and the price threshold, and it doesn’t factor in other costs or charges by the provider. Contact your supplier if you think it isn’t applying the discount correctly.

Energy prices are hard to predict but remain high, so it’s worth also comparing business energy suppliers, including standing charges and fees. If you are on a deemed and out-of-contract (usually the most expensive) or standard variable tariff, you may want to consider the stability of a fixed contract.

Image source: Getty Images

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