A new two-tier energy bills discount scheme is to come into force from April, the Treasury announced last night (9 January).
The scheme will mean all eligible UK businesses and other non-domestic energy users will receive a discount on high energy bills from 1 April this year to 31 March 2024.
Eligible non-domestic customers will have 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.
However, businesses in sectors with particularly high levels of energy use will be able to apply to receive a higher level of discount under the Energy and Trade Intensive Industries scheme. This discount will 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. (See below for details.)
A list of trade sectors that can apply for this is defined by SIC codes and, among many other sectors, includes:
- 10.71 Manufacture of bread; manufacture of fresh pastry goods and cakes
- 10.61 Manufacture of grain mill products
- 10.62 Manufacture of starches and starch products
The Treasury said the new scheme strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets.
“Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine. But to provide reassurance against the risk of prices rising again we are launching the new Energy Bills Discount Scheme, giving businesses the certainty they need to plan ahead,” explained Chancellor of the Exchequer Jeremy Hunt.
He has written to OFGEM for an update in time for the Budget on the progress of their review into the non-domestic market.
The Treasury said he has asked for an assessment of whether further action is needed to secure a well-functioning market for non-domestic customers following reports of challenges certain customers are facing, including in relation to the pricing and availability of tariffs, standing charges and renewal terms, and the ability of certain sectors to secure contracts.
Energy Bill Discount Scheme summary
For all eligible non-domestic customers
For eligible non-domestic customers the government has announced the following support:
- From 1 April 2023 to 31 March 2024, all 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.
- This will be subject to a wholesale price threshold, set with reference to the support provided for domestic consumers, of £107/MWh for gas and £302/MWh for electricity. Businesses experiencing energy costs below this level will not receive support.
- Customers do not need to apply for their discount as suppliers will automatically apply reductions to the bills of all eligible non-domestic customers.
Energy and Trade Intensive Industries
For eligible Energy and Trade Intensive Industries, 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 for gas and £185/MWh 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.
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