The Energy Bill Discount Scheme (EBDS) & heat network discount: details & next steps for heat suppliers
22nd March 2023Written by: Eelinn Vanquaethem, Marketing & Content Manager
Updated on: 7th September 2023
In a nutshell
The Energy Bill Discount Scheme (EBDS) has replaced the Energy Bill Relief Scheme (EBRS) from 1st April 2023, and will run until 31st March 2024.
For heat networks, the retail unit charges are capped at:
- Gas: 7.45p/kWh exc. VAT (7.83p/kWh inc. VAT)
- Electricity: 32.4p/kWh exc. VAT (34p/kWh incl. VAT)
Heat suppliers must apply for the additional heat network discount via the digital portal set up by the Government. The deadline was 25th July 2023, and any heat suppliers who have not yet applied may now face enforcement action. Heat suppliers can still apply via the application portal.
Please provide the outcome of your application and any upcoming new energy rates for your heat network to your dedicated account manager at your metering & billing provider.
From 1st April 2023, the Energy Bill Relief Scheme (EBRS) has been replaced with the Energy Bill Discount Scheme (EBDS) providing a reduced discount to non-domestic consumers on their energy bills. The EBRS has always been a temporary solution to allow businesses to adapt to new energy prices, according to Government.
With the Energy Price Guarantee being extended at the same time – only benefitting heat network residents through their electricity bills – more needs to be done for those on heat networks. Following Government lobbying along with other organisations through workshops organised by the UK’s District Energy Association (UKDEA), we are pleased to share an additional discount for heat networks has been made available.
Contents
What is the Energy Bill Discount Scheme (EBDS)?
What is the EBDS for heat networks?
- Register on the heat network discount portal
- Inform your metering & billing provider of any upcoming new energy rates
What is the Energy Bill Discount Scheme (EBDS)?
The Energy Bill Discount Scheme is a newly announced scheme by the Government to help non-domestic consumers to afford their energy bills. It has replaced the Energy Bill Relief Scheme from 1st April 2023, and will run until 31st March 2024.
According to the Government, the EBRS was always going to be a temporary solution to help businesses adjust to the recent economic climate. Wholesale energy prices have now fallen to pre-2022 levels, and the EBDS will provide reduced discounts to those on non-domestic fixed price energy contracts.
Similar to the EBRS, the EBDS will apply to all businesses, voluntary sector and public sector organisations who are on out of contract or standard variable tariffs, on flexible purchase contracts, or on variable ‘Day Ahead Index’ (DAI) tariffs. Those on fixed price energy contracts are also eligible, but whereas the EBRS only applied to those contracts signed after 1st April 2022, the EBDS will apply to all contracts agreed on or after 1st December 2021.
As wholesale energy prices have now fallen, the available discount has also been reduced:
- Electricity Discount: 1.961p/kilowatt hour (kWh) with a price threshold of 30.2p/kWh.
- Gas Discount: 0.697p/kWh with a price threshold of 10.7p/kWh
The discount is calculated as the difference between the wholesale price and the price threshold. The discount is phased in when the contract’s wholesale price exceeds the floor price, until the total discount per kWh reaches the maximum discount for that fuel.
Figure 1: The above chart illustrates how much a heat supplier would have to pay towards each element of a contract at 30p/kWh under the Energy Bill Relief Scheme compared to the Energy Bill Discount Scheme.
What is the EBDS for heat networks?
Insite Energy and other organisations in the heat network industry have noticed that the initial EBRS did not consider heat network residents to be domestic energy users, resulting in those residents missing out on Government support akin to the Energy Price Guarantee. Having lobbied Government via UKDEA hosted workshops, an additional discount rate has been put in place for domestic heat network residents to ensure that they receive the same benefits as those with a single gas boiler.
For heat networks, the retail unit charges will be capped at:
- Electricity: 34p/kWh inc. VAT & 32.4p/kWh exc. VAT
- Gas: 7.83p/kWh inc. VAT & 7.45p/kWh exc. VAT
As with the EBRS, the savings made from the EBDS by heat suppliers should be passed onto their heat network residents and applied to their heat tariffs under the Energy Prices Act 2022. The Government will also compensate suppliers for the reduction in wholesale gas and electricity unit prices that they are passing onto non-domestic customers.
Higher discount levels will also be available to Energy and Trade Intensive Industries (ETIIs), but this will not apply to most gas or electricity contracts associated with heat networks.
Next steps for heat suppliers
- Register on the heat network discount portal
Heat providers must apply for the additional heat network discount through the digital application portal set up by the Department for Energy Security and Net Zero (DESNZ).
All heat suppliers with at least one domestic customer must apply, even if they have secured prices cheaper than the EBDS target price of 7.45p/kWh excl. VAT.
The deadline to apply was the 25th July 2023, and any heat suppliers who have not yet applied may now face enforcement action. Heat suppliers can still apply via the application portal, or via the bulk upload template if they have more than 10 heat networks. Your metering & billing provider cannot register on your behalf.
At the moment, applications have an average review period of 3 weeks. Successful applications will result in an eligibility certificate, which will be issued to both the heat supplier and the energy supplier. This will assist energy suppliers in identifying which heat networks will need to receive the higher heat network discount rate.
Once you have obtained clarification on whether you are eligible for either the standard EBDS or EBDS for Heat Networks, please ensure you notify your account manager as soon as possible. They will then support you with a tariff review to ensure the savings are communicated and passed onto your residents in line with the pass-through requirements.
- Inform your metering & billing provider of any upcoming new energy rates
During the EBDS period, and at your request, your metering & billing provider should be able to support you with tariff calculations to ensure that your customers pay for their energy in line with the charges you receive. Failure to do so may lead to considerable over or under charges applied to residents and you may, as a result, not recover enough funds to pay your supply costs or overcharge residents, many of whom are already struggling to pay for increased energy costs.
At Insite Energy, we aim to support all of our clients through new regulations and legislation. If you have any questions or are aware of upcoming new energy rates for your heat network, please do not hesitate to get in touch with your dedicated account manager.