Existing Energy Support for Businesses To End

With the current Energy Bills Discount for businesses expiring, what support is being offered beyond March 31st 2023

Having previously said that the unprecedented support was “time-limited”, HM Treasury announced that the £18.4bn, six-month energy support scheme was to end for businesses, to be replaced by a less generous £5.5bn energy bills support scheme running until 31st March 2024.

The energy support scheme was mainly used by businesses, charities, schools and other public sector organisations after it was first launched in September 2022, after gas prices were driven up by the war in Ukraine.

Although wholesale prices are now back to below the level it was before Russia’s invasion, it still remains higher than what it was in the months prior.

What will the new Energy Bill Discount Scheme look like

For eligible non-domestic customers who have a contract with a licensed energy supplier, the government has announced the following support from 1st April 2023 to 31st March 2024:

• All eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount for gas automatically applied of up to £6.97/MWh (0.697p/KWh)
• All eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount for electricity automatically applied of up to £19.61/MWh (1.961p/KWh)

This is subject to a wholesale price threshold, set with reference to the support provided for domestic consumers, of £107/MWh (10.7p/KWh for gas and £302/MWh (30.2p/KWh) for electricity, meaning that businesses experiencing energy costs below this level will not receive any support

For energy and trade intensive industries (ETII), the government has announced:

• These businesses will receive a discount reflecting the difference between a price threshold and the relevant wholesale price.
• The price threshold for the scheme will be £99/MWh (9.9p/KWh) for gas and £185/MWh (18.5p/KWh) for electricity.
• This discount will only apply to 70% of energy volumes and will be subject to a ‘maximum discount’ of £40.0/MWh for gas and £89.1/MWh for electricity.

Businesses may need to register for the higher level of ETII support and details on how to apply will be released in due course. Energy and Trade Intensive Industries in scope of the additional support are listed here List of sectors eligible for the Energy and Trade Intensive Industries (“ETII”) scheme

What has HM Treasury said about the lower levels of support

HM Treasury has said that the lower level of support “strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets”. Whilst also helping those “locked into contracts signed before recent substantial falls in the wholesale price manage their costs and provide others with reassurance against the risk of prices rises again”.