The End of the Energy Bills Relief Scheme and Energy Bills Discount Scheme: What Small Businesses Need to Know
The UK government’s Energy Bills Relief Scheme (EBRS) and Energy Bills Discount Scheme (EBDS) were crucial in supporting small businesses during the energy crisis. However, with energy prices stabilising, these schemes have now been phased out. Here’s a closer look at how the schemes worked and why they ended.
What were the EBRS and EBDS?
Energy Bills Relief Scheme (EBRS)
Launched in October 2022, the EBRS capped wholesale energy prices for non-domestic customers. This provided immediate relief from unprecedented spikes in energy costs, ensuring businesses received manageable bills during this period. The scheme ran for six months, until March 2023, during the height of the energy crisis.
- Price Cap: £211 per megawatt-hour (MWh) for electricity and £75 per MWh for gas.
- Automatic Discounts: Businesses automatically benefited from the scheme through their energy suppliers, with no application needed.
Energy bills discount scheme (EBDS)
Replacing EBRS in April 2023. EBDS offered a discount on non-domestic gas and electricity unit rates. EBDS had preset criteria which was defined by the Department for Energy Security and Net Zero (DESNZ) and if customers met this criteria, energy suppliers automatically applied this part of the discount.
EBDS then offered a more targeted approach with smaller discounts, particularly focused on energy-intensive sectors such as manufacturing and agriculture. These were discounts such as the Energy and Trade Intensive Industries Discount, and the Qualifying Heat Network Discount which needed to be applied for (directly to DESNZ) before the discount could be added. The scheme ran until March 2024, but at significantly reduced discount levels compared to EBRS.
- Discount: Up to £19.61 per MWh for electricity and £6.97 per MWh for gas.
- Higher Support for Energy-Intensive Industries: Sectors most affected by energy costs received more substantial discounts (up to £89 per MWh for electricity and £40 per MWh for gas).
- Automatic Discounts: Businesses automatically benefited from the scheme through their energy suppliers, with no application needed.
Why were these schemes phased out?
The Energy Bills Relief Scheme and Energy Bills Discount Scheme were temporary measures introduced to protect businesses from extreme energy price volatility caused by the global energy crisis of 2022. At its peak, the wholesale price of gas soared to unprecedented levels, driven by a combination of supply chain disruptions, the war in Ukraine, and heightened demand.
At the peak of the crisis in August 2022:
- Electricity prices spiked to above £400 per MWh.
- Gas prices surged to over £550 per MWh, nearly 10 times the average price seen in previous years.
These extreme price levels made government intervention necessary. However, as 2023 progressed, global energy markets began to stabilise. By mid-2023:
- Electricity prices dropped to approximately £100-£130 per MWh, significantly lower than the peaks but still slightly higher than historical norms.
- Gas prices had fallen to around £60-£80 per MWh, back to more typical levels seen in pre-crisis years.
With wholesale prices returning to more manageable levels, the rationale for extensive government subsidies diminished. The government decided to phase out EBRS and EBDS, focusing on long-term energy resilience and encouraging businesses to adopt energy efficiency measures.
How did businesses claim the discount?
One of the key benefits of both EBRS and EBDS, was the automatic application of discounts if small business customers met DESNZ criteria. Businesses did not need to apply separately; energy suppliers applied the appropriate discount to eligible bills based on the business's energy contract and consumption levels. This streamlined approach ensured that small businesses could benefit from the relief without any of the admin.
Other Available Support for Small Businesses
Although the energy relief schemes have ended, there are still various support measures for small businesses, including:
- Business Rates Relief: Small businesses can access reductions in property taxes through the Small Business Rate Relief (SBRR).
- Energy Efficiency Grants: Funding is available for businesses investing in energy-saving measures, such as upgrading to more efficient equipment.
The Energy Bills Relief Scheme and Energy Bills Discount Scheme played an essential role in supporting small businesses during a period of extreme energy price volatility. However, as wholesale energy prices settled in 2023, these schemes were phased out. While energy costs have returned to more typical levels, businesses must remain vigilant about future price fluctuations and take advantage of available support for energy efficiency and cost-saving measures to build resilience for the future.
If you’re looking for ways to reduce your energy efficiency, take a look at our top energy saving tips for small businesses.
