The Energy Bill Discount Scheme – what this means for you

Within the electricity graph, we can see that under EBRS base support was 21.1p/kWh and the new base support under the EBDS is 30.2p/kWh. The earlier maximum threshold was 55.60p/kWh and under the new EBDS, it is 32.16p/kWh. This, therefore, reduces the volume of discount available and increases the wholesale cost to become eligible. Similarly, within the gas graph, we can see that under the EBRS base support was 7.50p/kWh and the new base support under the EBDS is 10.70p/kWh. The earlier maximum threshold was 16.60p/kWh and the under the new EBDS, it is 11.40p/kWh. Wholesale commodity costs fluctuate regularly, affected by supply and demand, economic factors and temperature.

At Utility Bidder, we recommend speaking to an expert to understand the best choice for your business at the point of renewal. Call us on 0800 007 4001 to find out more about wholesale costs and the impact of EBDS on your business.

How is the discount calculated?
As a working example, if an electricity contract was agreed after 1st December 2021 at 70p per kilowatt hour, but the make-up of this was
40p wholesale cost, only 40p will become eligible for the discount.
Under the new discount scheme, the maximum discount any customer can receive against their electricity wholesale cost is 19.6p.
However, the threshold wholesale unit cost must exceed 30.02p to qualify for this discount. The difference is discounted. In this example,
9.8p will be discounted by EBDS. This is a discount of 25% on the wholesale cost and a 14% discount on the overall cost.
Example Pence per kWh
Unit price £0.70 Non-wholesale cost* £0.30 Wholesale cost £0.40 Government threshold £0.302 Maximum discount £0.098 Non-wholesale costs £0.30 Wholesale cost with discount £0.302 Total charge £0.602 Total reduction of unit price -14% Total reduction of wholesale cost -24.5%

*NOTE: non-wholesale charges can fluctuate depending on your agreement.

The government have stated ‘The discount will reflect the
difference between the government-supported price and the
relevant wholesale price”. Securing a contract at a period
of lower wholesale costs will be beneficial but you will only
receive help from the EBDS if prices rise significantly. Get in
touch with one of our energy experts today to discuss your
needs further. Should you stay on a variable contract or keep
it outside of a contract? This is your decision, but what might
help is understanding how the two contract types can affect
your business in the short and long term.

If you secure an energy contract before March 2024, and the wholesale price is above the threshold, the discount will be applied. You can secure a contract up to 12 months before your current contract comes to an end, so by keeping a keen eye on the market and having an energy expert on hand, you will be able to navigate the best time to secure your next contract which may have a lower wholesale cost than the threshold – meaning you will not benefit from EBRS but will secure a lower rate that will be applied as soon as your new contract starts for the duration of the agreement.

Unfortunately, you won’t be eligible for the scheme. However, any contracts secured before this time are likely to have a much lower wholesale cost than the current market provides.

Speak to your supplier – they might be able to recommend
payment plans or alternative plans that could aid your situation.
Your supplier would rather know if there were going to be
difficulties making payments so we suggest making the call to see
if there is anything they can assist with.
Looking at alternative ways to increase your viability for business
support – Managing business credit risk needs to be a priority on
your list. To request other support from a lender, gain better rates
and improve your opportunities for funding availability, a strong
credit rating will support this. We work with specialist partners
who can review your credit rating and make suggestions on how
your credit rating can be improved/repaired quickly. This will help
you to gain access to more supplier prices which may be cheaper
in the long term and may also remove any upfront deposits that
might be needed.
Save on your energy consumption – Locating where your business
is using the most energy may help shape when and how you use
your appliances. We have put together a handy tool that helps you
find the whereabouts of your business that is costing the most.
There may be some surprises in there that if adjusted, influence
your spending.