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Already suffering from labour shortages, supply chain issues, and rising inflation in 2022, UK businesses were suddenly blasted with sky-high energy costs last summer as the war in Ukraine and other energy market problems created a global oil and gas crunch.
With energy prices rising by as much as 500%, and intent on preventing tens of thousands of business closures, the UK Government introduced the Energy Bill Relief Scheme (EBRS) for businesses from October of last year. Designed to soften the impact of high wholesale energy prices, the scheme capped the price per energy unit that businesses would pay. However, that scheme has now ended (on March 31st 2023), and has been replaced by the Energy Bills Discount Scheme since April 1st 2023.
Although less generous than the old scheme, the new savings programme still limits the gas and electricity bills that businesses will face. Read on to find out more about the Energy Bills Discount Scheme and what it means to you.
Why did the government replace EBRS with this new scheme?
For two reasons: Firstly, the UK Government says the previous scheme cost the taxpayer over £18billion, equivalent to a 3p in the £1 rise in income tax – a level of support that they claim was unsustainable. Secondly, global oil prices have fallen dramatically since September last year and wholesale gas prices are now less than they were before the war in Ukraine began. This means natural market forces are already reducing business energy bills, thus lowering the need for such large financial support. The government says the new relief package will be worth £5.5 billion over a 12 months period.
Who does the Energy Bills Discount Scheme apply to?
All eligible UK businesses, charities, and public sector organisations who buy gas and electricity from a licensed energy supplier. Some energy intensive businesses, (typically manufacturers), may be eligible for a higher rate of relief.
When did the new scheme start and what will I get?
From 1 April 2023 to 31 March 2024, eligible business 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 automatically applied to their electricity bill, (except for those already benefitting from lower energy prices).
A significantly higher level of support will be provided to businesses in sectors identified as energy and trade intensive – predominately manufacturers. These businesses 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.
Important: Businesses who are buying energy at prices less than the government’s ‘wholesale price threshold’ will not receive energy support under the new scheme. Wholesale price thresholds are:
For most businesses: 107/MWh for gas and £302/MWh for electricity.
For energy intensive businesses: £99/MWh for gas and £185/MWh for electricity. Discounts will only apply to 70% of energy volumes and are subject to a ‘maximum discount’ of £40.0/MWh for gas and £89.1/MWh for electricity.
Energy discounts at a glance
| Discount savings per MWh | ||
| Gas | Electricity | |
| Most businesses | £6.97 | £19.61 |
| Energy-intensive businesses | £40.00 | £89.10 |
Do I need to apply to get the discount?
No. If you receive an energy saving under the previous scheme, you will automatically get a saving under the new scheme. There is no need to contact your energy provider.
I have a new business and haven’t signed an energy contract yet. What about me?
You should sign a new contract as soon as possible. The relief savings will be automatically deducted from your new bill.
I’m up for renewal soon, what should I do?
Even though wholesale oil and gas prices have come down since last September, energy rates for businesses are still expected to remain high through 2023. If you are up for renewal soon, upload your energy bill to Swoop: we’ll assess the market and recommend the best time to forward-purchase your next energy contract.
What else is the government doing to help UK organisations?
Businesses in England are currently benefitting from support with their business rates bills that the government claims is worth £13.6 billion over the next five years. There is also UK-wide £2.4 billion fuel duty cut, and a six months extension to the alcohol duty freeze. Additionally, businesses with profits below £250,000 are protected from the full corporation rate rise, whole those making less than £50,000 – the vast majority of UK companies – will not see any corporation tax increase at all.
Can I get more support for my business?
Energy costs are not the only pressing concern for UK businesses. Organisations face rising costs for raw materials, rent, business rates, labour and transport – a cluster of issues that can crimp cashflow and apply a brake to growth. Swoop works with a wide array of lenders who can provide swift and affordable funding solutions for most financial problems. To find out more about equipment and vehicle financing, working capital loans, VAT loans and more, register with Swoop today.
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