Government announces new energy support scheme for businesses

The Government has announced a new energy support scheme for businesses, effective from the 1 April when the current support scheme ends.  Full details are available in the Government announcement.

The Exchequer Secretary to the Treasury, James Cartlidge said that “the Government had already provided a £18bn package of support for non-domestic users, which he said had lessened the shock of the immediate increase in prices.” However, he said that “it was now in the national economic interest to restore financial sustainability in a sensible and fair way that balanced supporting businesses with protecting taxpayers and that firms needed to adapt and invest in energy efficiency to remain viable.” The Government plans to support them with £6bn of additional investment to cut the UK’s overall energy use.

The key points of the new Energy Bill Support Scheme include:

• From 1 April 2023 to 31 March 2024, eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill, except for those benefitting from lower energy prices.

A higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing. Manufacturers are often highly exposed to both energy prices and international competition, making it harder for them to absorb these costs.  The list of sectors eligible for Energy and Trade Intensive Industries (ETII) is here.  Details of the support to be made available for these businesses will include:

• a discount reflecting the difference between a price threshold and the relevant wholesale price.
• the price threshold for the scheme will be £99/MWh for gas and £185/MWh for electricity.
• this discount will only apply to 70% of energy volumes and will be subject to a ‘maximum discount’ of £40/MWh for gas and £89.10/MWh for electricity.

The application process for the ETII Scheme support has not yet been announced.

A typical medium-sized manufacturer would expect to receive nearly £700,000 of direct support over 12 months.