A Guide to the Energy Bill Relief Scheme for Business

Rising energy prices have been a hot-button issue over the last couple of years. A conflation of factors has forced them up, to the point that both residential and business customers have found themselves at the mercy of events elsewhere that are far beyond their control.

The government’s response to this has been to require price caps, to ensure that prices didn’t rise to levels that were completely unrealistic for customers. For businesses, this meant the Energy Bill Relief Scheme for Business and its successor, the Energy Bills Discount Scheme; a change which in itself demonstrated why it’s so important to stay up to date with the latest news in a rapidly evolving environment.

Overview of the Energy Bill Relief Scheme and the Energy Bills Discount Scheme

The Energy Bill Relief Scheme (EBRS) was introduced on the 1st of October 2022 to support non-domestic energy users including businesses, public sector organisations, and charities. The scheme ran for six months throughout the winter before being replaced on the 1st of April 2023 by the Energy Bills Discount Scheme (EBDS).

Why Was the Energy Bill Relief Scheme Introduced?

The EBRS capped energy prices for non-residential energy users in response to the concern over rapidly rising global energy prices brought about by a conflation of circumstances, with the real tipping point being Russia’s invasion of Ukraine.

How Did the Energy Bills Discount Scheme Work?

The EBRS was essentially a price cap, similar to the consumer cap set by the Office of Gas and Electricity Markets (Ofgem), for non-domestic consumers in Great Britain, which included not only businesses but also other non-domestic organisations such as schools, charities and hospitals.

The cap was placed on Supported Wholesale Prices for gas and electricity usage between the 1st of October 2022 to the 31st of March 2023. Discounts were automatically applied to non-domestic energy bills with effect from October 2022’s energy bills. Businesses and other non-domestic consumers receiving relief under the scheme also no longer had to pay a green levy.

What is the Energy Bills Discount Scheme?

A combination of the vast cost of such a scheme coupled with falling gas prices meant that the EBRS was only ever going to be a temporary measure, and it only took until January 2023 for a further announcement to be made, that from the start of April 2023, the EBRS would be replaced by the EBDS, with the new scheme running from the 1st April 2023 to the 31st March 2024.

How Does the Energy Bills Discount Scheme Work?

In a broadly similar way to the EBRS, only with a lower discount and with slightly different criteria for businesses. This reduction to per-unit costs of energy bills is subject to a maximum discount and for as long as the unit rate of a megawatt per hour (MWh) is above a certain wholesale price threshold.

Latest Developments

The big news over these initiatives came on the 9th of January 2023, when it was confirmed that the EBRS would be replaced by the EBDS.

As with the original EBRS, suppliers would automatically apply EBDS reductions to the bills of all eligible customers, but rather than being a price cap, the EBDS is a price reduction for users. The difference between the two schemes can be seen in the amount of money put aside for them. The government set aside £18bn for six months to fund the EBRS, but only £5.5bn for twelve months to fund the EBDS.

Who is Eligible for the Energy Bill Discount Scheme for Business?

The EBDS applies to all non-residential gas and electricity users, including businesses, who are: On existing fixed price contracts that were agreed on or after the 1st December 2021 who are: signing new fixed price contracts, on deemed standard variable tariffs or out-of-contract, or on flexible purchase or similar contracts.

Can Non-profit Organisations Also Benefit From the Scheme?

Yes, they can! The EBDS applies not only to business customers, but to all non-domestic customers, so these discounts also apply to hospitals, schools, and non-profit organisations.

Are There Any Additional Reductions for Businesses With Higher Energy Requirements?

Yes, there are. As part of their review of the original Energy Bill Relief Scheme, the UK government identified which non-domestic energy users are ‘particularly vulnerable’ to high energy prices. These users have been labelled 'Energy and Trade Intensive Industries' (ETII) and will receive a higher level of support in the form of a greater per-unit cost discount and a lower price threshold. But there’s a catch; to be considered ETII-eligible, you have to apply.

How to Apply to Be Considered Part of the Energy and Trade Intensive Industry

You will need at least 6 months' worth of financial evidence that you meet the criteria, and you must apply within 90 days from the date you accumulated these 6 months of evidence.

What Documentation is Required for the Application Process?

Before you start your application process, you will need the following:

• Contact details of the applicant (including email address and phone number)

• Registered name and address of the organisation or business

• Company registration number (CRN) if the organisation has one

• Up to 4 ETII eligible standard industrial classification (SIC) codes that relate to your organisation’s activities - see the list of eligible sector SIC codes

• Energy supplier names and the gas or electricity meter point numbers (MPRN or MPAN) associated with the property, found on bills from your energy suppliers

  • If you have more than 10-meter point numbers per supplier, a template has been provided for you to record your meter point numbers

• The name of your organisation as it appears on your bill from your energy suppliers

• Details of any intermediary providers such as landlords if you don’t pay energy suppliers directly

You will also need to supply:

• A signed director’s declaration letter - you will need to provide a letter signed by a named director or equivalent of your organisation or business. You should use the template provided in the application pack, which sets out what must be included in your letter.

• Additional financial evidence - you may also need to provide further information if your business or organisation was not registered at Companies House with an eligible SIC code in December 2022.

This evidence includes:

• Your most recent full set of end-of-year accounts - if you do not have these, upload evidence of your most recent company accounts, covering a minimum period of the most recent 6 months

• An Income Statement referring to the same period as the accounts

• A sample of 20 sales invoices, no older than 12 months from the date of the signed declaration, which demonstrates activity that falls within an eligible sector

• Licence or trade body membership details for regulated industries (if applicable)

• Any additional evidence you want to support your application

To help with the processing of your application, you could also upload a letter signed by an external auditor or chartered accountant. This should confirm that you are in an eligible sector and that 50% or more of your revenue generated from Great Britain and Northern Ireland are in an eligible sector. A template for the accountant’s report is available.

Sole traders who cannot provide all the other financial evidence should upload a sample of 20 sales and purchase invoices for the eligible activities.

How Can I Check the Status of My Application?

You will need about 30 minutes to complete the form, and your application must be completed in one session. You cannot save the form and return to it later. You’ll be notified by email of whether your application has been successful. If deemed eligible, you’ll be sent an ETII eligibility certificate (for each group company, if this applies.)

The contact details for the EBDS are as follows:

Email: support@ebds.beis.gov.uk

Telephone: 030 0400 5251

The telephone line is open Monday to Friday, 9 am to 5 pm. You will also need to contact this telephone number if you’re unable to apply online for any reason.

Are There Any Deadlines for Applying to the Scheme?

If you were eligible to apply for this scheme on or before the 26th of April 2023, you’ve been unable to apply since the 25th of July 2023. After that date, you can only apply for this scheme if you become eligible after the 26th of April 2023. For example, if you are a new organisation, or if you now generate at least 50% of your revenue from activity in an eligible Standard Industrial Classification code. A full list of those codes is available here.

How Long Does It Take to See Savings on Energy Bills After Participating in the Scheme?

Any savings from an application will be backdated to the date you became eligible.

Are There Any Tax Incentives Associated With Energy Bill Relief for Businesses?

No, but compensation may be available for the indirect costs of the UK ETS (Emissions Trading Scheme) and the CPS (Carbon Price Support) mechanism.

What is the Role of Energy Consultants in the Scheme?

Energy consultants aren’t necessarily able to apply for the ETII, but they can offer a wealth of energy-saving advice, as well as comprehensive advice on the energy market which may enable you to make further savings.

This country remains in the grip of a cost of living crisis and It is clear that the EBDS was not as generous as the EBRS, but it will still pay for you to ensure that this deduction is being made by your energy supplier and if eligible, applying to the ETII could save you even more money. And since the savings that your business could make through reducing energy costs can come from a wide variety of sources, engaging with an energy consultant could help you to save even more money, while pivoting your company towards a more sustainable future.