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What can businesses do about energy bills?

Rising gas and electricity costs have been a major concern for companies of all kinds – especially those that require a lot of energy to do business – since full-scale war broke out between Russia and Ukraine in 2022.

Families too have been hit by sky-high household bills, only tempered by a government cap on the prices paid by domestic energy customers.

And while there is currently no such price cap in place for business energy bills, many companies can qualify for energy unit discounts via the recently announced Energy Bills Discount Scheme (EBDS).

What is the EBDS?

Under the terms of this latest energy discount scheme, eligible organisations – including charities, care homes, and schools – should automatically receive a discount of £6.97 a megawatt hour (MWh) for gas and £19.61 a MWh for electricity, payable between April 2023 and March 2024.

According to the government, this equates to a saving of £2,300 for an average pub, or £400 for a typical small retail store.

“This country has a proud industrial history and one that we must protect from the volatile energy market, following Putin’s illegal war in Ukraine.

“That’s why we’re going above and beyond to make sure all businesses can access our support, even if they get their energy via non-standard routes – and I urge these customers to check their eligibility today.”

Amanda Solloway, Minister for Energy Consumers and Affordability

The EBDS replaces an earlier scheme, the Energy Bill Relief Scheme, which was launched in October 2022 and covered the difference between wholesale prices and a “government-supported price” of £211 a MWh for electricity and £75 a MWh for gas – at a reported cost of more than £35 million a day.

However, while it enables certain large companies, such as steelmakers, to claim government support in a way not previously possible, it has been criticised for reducing support for smaller businesses.

The Federation of Small Businesses (FSB) claims a business paying £24,528 per year for energy under the old government support scheme could now face a bill £82,539 under the EBDS.

The EBDS – at a glance

  • Who is eligible for the EBDS?

    Businesses, voluntary sector organisations, such as charities, and public sector organisations such as schools and hospitals that are:

    • on an existing or new fixed-price contract agreed on or after 1 December 2021
    • on a variable tariff
    • on a “flexible purchase” or similar contract
    • out of contract or on a “deemed” contract
    • on a variable “Day Ahead Index” (DAI) tariff in Northern Ireland

  • How does the EBDS work?

    You do not need to apply to qualify for support under the EBDS.

    The discount will automatically be added to your bill by your energy supplier, while the level of support will depend on your energy contract and when you signed up.

  • What discounts are available?

    The discounts being offered via the EBDS are:

    • £19.61 per MWh for electricity (with a price threshold of £302 per MWh)
    • £6.97 per MWh for gas (with a price threshold of £107 per MWh)

    However, businesses operating in Energy and Trade Intensive Industries (ETIIs) can apply for a higher level of support, subject to a maximum discount that can be applied to 70% of energy volumes.

    These are:

    • £89 per MWh for electricity (with a price threshold of £185 per MWh)
    • £40 per MWh for gas (with a price threshold of £99 per MWh)

  • What about off-grid businesses?

    Companies not connected to the gas or electricity grid may be able to apply for a one-off payment of £150 if:

    • the business property is not connected to the gas or electricity grid
    • you use alternative fuels such as wood or kerosene for heating

    Director of Policy at the Association for Renewable Energy & Clean Technology, Frank Gordon, said: “In the longer term, businesses can make considerable bill savings by moving to renewable energy supplies, such as generating their own renewable energy on-site.”

Is there any other help with business energy bills available?

Yes. If your business fails to qualify for support under the EBDS, or your energy bills remain out of reach once the discounts are applied, there are some other ways to manage your energy costs.

These include:

1. Set up a business energy payment plan

It’s sensible to contact your supplier as soon as you know you are likely to struggle to pay your energy bills; companies are always easier to negotiate with before their bills start to go unpaid.

You can then request access to a more affordable payment plan, which could include:

  • a review of your payments and debt repayments
  • payment breaks or reductions
  • more time to pay
  • access to hardship funds

If your supplier is unwilling to help, it may also be worth taking advice from an organisation such as Citizens Advice (0808 223 1133).

2. Look into business finance schemes and grants 

Other grants and schemes may be available from:

  • Suppliers – many companies offer both hardship funds and energy efficiency grants such as subsidies on the cost of buying more energy-efficient equipment.
  • The government – there are various local business support schemes that you can use to help minimise your energy costs. Check what’s available in your area by checking the government finance and support finder or asking your local council.
  • Charities – depending on your sector and what you’re trying to do, you may be able to benefit from charitable funding. To find out more, try Grants Online.