Government announces energy bills discount scheme

The Energy Bills Discount Scheme will provide businesses, public sector organisations and voluntary bodies with automatic discounts on the unit prices of gas and electricity from 1st April 2023 to 31st March 2024.

The new scheme is a significant reduction in the level of support that has been provided to businesses through the Energy Bill Relief Scheme, in place since 1st October 2022. The older Energy Bill Relief Scheme was estimated to cost £18bn, the new Energy Bills Discount Scheme has been capped at £5.5bn.

Businesses in energy and trade intensive industries, will receive a greater level of support. This is because they are less able to pass their increased costs onto customers due to international competition.

This includes a number of food and drink manufacturers. Fertilizer manufacturers – essential to food production – will also benefit.

For example, a typical pub could receive up to £2,280 of support whilst a medium-sized manufacturer may receive up to £687,120 over the 23/24 financial year.

Energy Bills Discount Scheme support details

The discount is calculated per MWh and is as below for gas and electricity:

Both schemes are subject to wholesale price thresholds, any organisation that has energy contracts agreed below these levels are not eligible for any support:

• The Energy Bills Discount Scheme wholesale price threshold is £107/MWh for gas and £302/MWh for electricity.
• Those in energy and trade intensive industries are subject to a threshold of £99/MWh for gas and £185/MWh for electricity.

In addition, the discount for energy and trade intensive industries will only apply to 70% of their energy volumes.

The below table sets out the food and drink industry sectors and the SIC codes that are eligible for the higher level of support as they are energy and trade intensive industries. The wider list of all industries eligible can be found here.