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 combination 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 was to introduce price caps to ensure that prices did not rise to completely unrealistic levels. For businesses, this meant the Energy Bill Relief Scheme and its successor, the Energy Bills Discount Scheme. These schemes provided temporary support during a period of extreme market volatility.

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

The Energy Bill Relief Scheme (EBRS) was introduced on 1 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 1 April 2023 by the Energy Bills Discount Scheme (EBDS), which ran until 31 March 2024.

Why Was the Energy Bill Relief Scheme Introduced?

The EBRS capped wholesale energy prices for non-domestic energy users. It was a response to rapidly rising global energy prices, which were driven by a combination of factors, particularly Russia’s invasion of Ukraine.

How Did the Energy Bill Relief Scheme Work?

The EBRS was essentially a government-supported price cap for non-domestic consumers in Great Britain, including businesses, charities, schools, and hospitals. It was separate from, but similar in principle to, the consumer price cap set by the Office of Gas and Electricity Markets (Ofgem).

The government set a Supported Wholesale Price for gas and electricity used between 1 October 2022 and 31 March 2023. The resulting discount was applied automatically to eligible non-domestic energy bills. Businesses and other non-domestic consumers receiving this relief were also exempt from paying green levies for the duration of the scheme.

What is the Energy Bills Discount Scheme?

The high cost of the EBRS, combined with falling wholesale gas prices, meant the scheme was always intended to be temporary. In January 2023, the government announced that the EBRS would be replaced by the less generous Energy Bills Discount Scheme (EBDS), which ran from 1 April 2023 to 31 March 2024.

How Did the Energy Bills Discount Scheme Work?

The EBDS provided a baseline discount on energy bills for eligible non-domestic customers. This was applied automatically by suppliers. The discount was smaller than under the EBRS and was only applied when wholesale prices were above a certain threshold, with the reduction capped at a maximum level.

Who Was Eligible for the Schemes?

Both the EBRS and EBDS applied automatically to most non-domestic contracts, including businesses of all sizes, charities, and public sector bodies like schools and hospitals. This covered fixed-price contracts that were agreed on or after 1 December 2021, as well as deemed, out-of-contract, and variable tariffs.

The Energy and Trade Intensive Industries (ETII) Exception

The government identified certain sectors as being ‘particularly vulnerable’ to high energy prices. These ‘Energy and Trade Intensive Industries’ (ETIIs) were eligible for a higher level of support under the EBDS.

Unlike the baseline discount, businesses had to apply to be recognised as an ETII. The application window for most businesses closed on 25 July 2023. The process required submitting financial evidence to prove that a majority of the business's revenue came from an eligible activity, as defined by a list of Standard Industrial Classification (SIC) codes.

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

No, but compensation was and is available for some businesses through a separate mechanism. The UK Emissions Trading Scheme (ETS) and Carbon Price Support (CPS) compensation scheme allows eligible energy-intensive industries to apply for relief from the indirect costs of carbon pricing. This scheme is still active, and you can find the latest eligibility criteria and guidance on the gov.uk website.

What Support Is Available for Businesses Now?

With the EBRS and EBDS now finished, there is no longer a universal, government-mandated discount on business energy bills. Wholesale prices, whilst lower than the peaks of 2022, remain volatile and significantly higher than historical norms.

The government has shifted its focus from broad support to more targeted schemes. For certain very energy-intensive sectors, a package of support known as the British Industry Supercharger provides relief from network charges and policy costs. A further scheme, the British Industrial Competitiveness Scheme (BICS), is set to launch in 2027 to help a wider range of manufacturers with their electricity bills.

For most businesses, however, the main way to manage energy costs is to secure the right contract and reduce consumption. An energy consultant can provide expert advice on the market and help you find a competitive fixed tariff to give your business certainty. They can also perform an audit of your premises to identify energy-saving opportunities, from simple behavioural changes to investing in more efficient equipment or on-site generation. In a market without government caps, taking control of your own energy strategy is more important than ever.