Energy Bills Discount Scheme

Amanda Solloway Excerpts

Tuesday 25th April 2023 Written Statements

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)]

On 9 January 2023, the Government announced details of the energy bills discount scheme, which will come into force on 26 April 2023, with support backdated to 1 April 2023. This will follow on from the energy bill relief scheme, which ended on 31 March 2023, and has supported businesses and public sector organisations such as schools and hospitals by providing a discount on wholesale gas and electricity prices. The Government provided an unprecedented package of support for non-domestic users through the winter in the shape of the Energy Bill Relief Scheme, with total support of £7.3 billion expected to be provided under this scheme, shielding businesses and saving some around half of their wholesale energy cost.

Wholesale energy prices have fallen significantly since the introduction of the energy bill relief scheme. The energy bills discount scheme reflects this change and makes adjustments to the support provided under the energy bill relief scheme. The energy bills discount scheme strikes a balance between supporting businesses between 1 April 2023 and 31 March 2024 and limiting taxpayer’s exposure to volatile energy markets. The scheme provides long-term certainty for businesses and reflects how the scale of the challenge has changed since September last year.

The energy bills discount scheme will provide all eligible businesses and other non-domestic energy customers with a discount on high gas and electricity bills until 31 March 2024, following the end of the energy bill relief scheme. It will also provide businesses in energy and trade-intensive industry sectors with a higher level of support as they are less able to pass these higher costs on to customers due to international competition. The energy bills discount scheme price reduction will be linked to the wholesale element of a non-domestic customer’s gas and electricity bill and Government will reimburse suppliers in accordance with the scheme.

Further support will be available to domestic end users on heat networks, who fall under the energy bills discount scheme due to heat network operators having commercial energy contracts, to ensure they do not face disproportionately higher energy bills than consumers in equivalent households who benefit from the energy price guarantee. Heat suppliers will be required to apply for this support and then pass on any discounts to their customers in a “just and reasonable” way.

Eligibility for support under the energy bill relief scheme and the energy bills discount scheme will also be extended to additional non-standard cases not previously eligible. This includes: where non-domestic customers have received gas or electricity from licence-exempt suppliers via private wire—localised electricity grids connected to local distribution networks but linked to a privately-owned central plant which produces electricity; or pipe, where gas is conveyed to the customer’s premises by pipe; and where prices paid are pegged to wholesale energy prices.

Statutory instruments were made on 24 April and laid on 25 April. These will establish the energy bills discount scheme and ensure that essential energy bill support is provided to UK businesses in Great Britain and Northern Ireland, that are supplied both by licensed gas and electricity suppliers and licence-exempt suppliers. They will also ensure that any non-domestic business or individual that receives energy through an intermediary will also benefit from the energy bills discount scheme in a “just and reasonable” way.

The Government are also running a number of other energy support schemes. These include the energy bill support scheme which delivered a £400 discount to consumers during the winter period and the energy price guarantee which has been extended until the end of June and protects customers from increases in energy costs by limiting the amount suppliers can charge per unit of energy used.

[HCWS741]