Energy Bills Discount Scheme (EBDS)
IMPORTANT – the full details of this scheme are still in development by Government and are subject to change.
What is the official name of the scheme?
This scheme has been called the ‘Energy Bills Discount Scheme’ (EBDS) as it covers help for eligible businesses and other non-domestic energy customers.
When does the EBDS start and how long will it last?
The ‘Energy Bills Discount Scheme’ (EBDS) starts on 1 April 2023 and is expected to last for 12 months until 31 March 2024.
How much will the scheme cost the government?
It is estimated that the total cost will be £5.5 billion to the Government.
Will all businesses receive the same support?
No, Energy & Trade Intensive Industries (ETIIs) and Qualifying Heat Suppliers (QHS) will receive additional support.
What is an Energy & Trade Intensive Industry (ETII)?
You will be considered as an eligible ETII if 50% or more of your sales/service in the financial year 2021-22 are in an eligible sector, as determined by the published list of Standard Industry Classification (SIC) codes. Customers need to apply via the government’s application process, this application can not be done through us as the supplier.
What's the difference between Energy & Trade Intensive Industries (ETII) and Energy Intensive Industries (EIIs)?
The Energy & Trade Intensive Industries (ETIIs) sectors were identified via the EBRS review as those meeting certain thresholds for energy and trade intensity. They are identifiable based on specific SIC codes, including many manufacturing SIC codes as well as those covering museums and libraries.
This is different to Energy Intensive Industries (EIIs) which are a group of businesses focused in sectors such as steel, chemicals, engineering and brick making industries. See a full explanation here.
However, given the energy intensity element of both lists, there will be significant overlap between them.
What is a Qualifying Heat Supplier (QHS)?
To qualify as a QHS, you will be a heat supplier who supplies and charges for supply of heating and/or hot water to domestic heat consumers through the heat network. If you think you may qualify as a QHS support, you must take action to apply for it when the application window opens.
What types of businesses are eligible for EBDS support?
All non-domestic customers in Great Britain will be eligible for the EBDS, provided they:
Have a fixed price energy contract, signed on or after 1 December 2021
Are in the process of signing a new fixed price contract
Are out of contract or deemed variable tariffs
Have a flexible purchase contract or similar
Some businesses may not see a significant discount, if any, under the new scheme.
What sort of contracts will be eligible for support under the EBDS?
All non-domestic customers may be eligible for support under this scheme. This includes fixed, flexible and deemed and extended supply contracts.
Under EBRS there wasn’t a cap for fixed rate contracts. This will mean that some customers currently receiving high discounts, will see a significant reduction in support. It is expected that the support for Flexible, Deemed and Extended Supply customers will work in the same way as the EBRS but updated with the new thresholds and caps (maximum discounts).
How and when will the EBDS support be applied to my invoice?
The support will show as a discount on customer’s invoices from April 2023 (billed in May) and continue until 31 March 2024.
What is the EBDS discount?
For fixed contracts, a look-up table will be published by the Department for Business, Energy & Industrial Strategy (BEIS), this will provide a per-unit discount of energy based on the date the contracted was signed. This discount will be based on a Wholesale Reference Price calculated by Government and the discount will be applied. The threshold below which customers will not receive any discount is increasing quite significantly from £211/MWh to £302/MWh (30.2p/kWh) under EBDS (normal) for electricity and from £75/MWh to £107/MWh (10.7p/kWh) for gas.
Unlike the EBRS, all EBDS support will now be subject to a cap (a maximum discount). The electricity discount received will be capped at £19.61/MWh (1.961 p/kWh) and the gas maximum discount will be £6.97/MWh (0.697p/kWh).
If your business qualifies as an ETII, it may be eligible for some additional support in the form of a lower wholesale threshold, set at £185/MWh (18.5p/kWh) for electricity and £99/MWh (9.9p/kWh) for gas. You would also qualify for a larger maximum discount of £89/MWh (8.9p/kWh) for electricity, and £40/MWh (4.0p/kWh) for gas. It is expected that this will be applied to 70% of volume with the remainder receiving standard EBDS support (if eligible). We await confirmation of this and the specific technical details from Government.
Do I need to apply for the scheme?
As with the existing EBRS, the standard EBDS support for non-ETIIs will be applied automatically to non-domestic customer accounts. ETIIs and QHSs will need to submit an application to government in order to receive the increased support.
What will the discount be called on my invoice?
We expect the discount to show on your energy invoice (or backing data for flexible supply). We will highlight the discount as the ‘Energy Bills Discount Scheme (EBDS)’.
How does the ETII discount explanation work in practice?
Customers approved by government will be granted ETII status only once this has been communicated to energy suppliers via the government portal. We will write to you within 15 days of this confirmation being received.
Eligible customers will receive the enhanced EBDS ETII relief for 70% of their total EBDS discount. The remaining 30% will attract the EBDS base relief, subject to meeting the relevant thresholds for both elements.
For fixed contract customers, the relevant ETII element (70% ) of the discount is determined based on the contract sign date (the date the contract was countersigned by us), the relevant EBDS ETII threshold, and the “Fixed Contracts – ETII” lookup table. The remaining (30%) of the discount is then determined in the same way however, this is based on the “Fixed Contracts – Base” lookup table, and subject to the bas ETII thresholds.
The EBDS relief provided cannot fall below the government supported price. If it were to, then the maximum discount would be reduced to bring the price to the government supported price, and not below.
For electricity customers the ETII threshold for government support is 18.5p/kWh, with a maximum discount of 8.9p/kWh. Any eligible support will be automatically applied to 70% of the discount.
The remaining base EBDS support (30%) will then be provided, subject to the threshold government supported price of 30.2p/kWh and a maximum discount of 1.961p/kWh.
Worked example
Electricity contract signed (countersigned by us) on 28th November 2022.
ETII discount for 28th November = 8.900p/kWh.
Base discount for fixed contracts signed 28th November 2022 = 1.0445p/kWh.
Unit rate agreed in contract = 34p/kWh.
As the contracted unit rate (34p/kWh) is above both the ETII and EBDS Base thresholds then both elements are to be included in the discount. This results in 70% of 8.9p/kWh and 30% of 1.0445p/kWh and achieves a total discount of 6.54p/kWh.
Please note, it is possible for an ETII eligible customer to not receive any discount subject to the discounts provided within the lookup tables. This is where the discount value is 0 (shown as – in the table for many instances). It is also possible for a customer to receive a discount for the ETII element but not the base element. This is due to the different thresholds in place for ETII and base discounts.
The same methodology is used for gas.
References
Energy Bills Discount Scheme: Energy and Trade Intensive Industry (ETII) guidance can be viewed here. The relevant rates and look up tables, containing the discounts can be found here.
We're struggling to keep up with payments, what support is out there?
If you’re having difficulty paying your invoice or if you have a question which prevents you from paying the bill, then please let us know immediately.
Call 0330 094 9184 or email SEUKL-Collections@shell.com. We’re available from 8am to 5pm, Monday to Friday.
You can also visit the Help area of our website for details of independent organisations that offer free advice.
Find out more
For more information about the Energy Bill Discount Scheme (EBDS) visit the Government website here.