26 Jan EBRS vs EBDS: a breakdown
EBRS vs EBDS: a breakdown
The government’s Energy Bill Relief Scheme (EBRS) is due to expire at the end of March to be replaced by the Energy Bill Discount Scheme (EBDS). Confusing, huh? Some of our schools have been receiving support from the government to the tune of £3,000+ per month, so what is going to happen now? Let’s have a look at the two schemes and see if we can work it out.
Okay, let’s call this one the Relief Scheme, to be clear. The Relief Scheme was announced by the government in 2022 as a way to combat spiralling energy costs for non-domestic consumers. It started in October and expires on 31 March 2023. Businesses like pubs, shops, and, yes, schools are all included in the scheme, as long as they agreed their fixed price contract after 1 December 2021 or have a variable / flexible tariff. The discount is automatically applied to bills, so there is no form-filling needed.
The discount is applied to the wholesale rates for electricity and gas, which is slightly different to the unit price that you pay. Your unit price is made up of this wholesale rate, plus some other charges like network and operating costs. The government has set a cap on the wholesale rate, meaning if the wholesale rate for electricity at the time you signed your energy contract is above the government-supported price of 21.1p per kWh, then the government will pay the difference. Put simply, you pay 21.1p/kWh wholesale rate and the government covers the rest. This Relief Scheme is currently saving you about 40% on your bills on average.
But that is about to end, what happens now? In steps the…
Or the Discount Scheme. This is replacing the Relief Scheme in the UK for non-domestic customers from 1 April 2023 and running for 1 year until 31 March 2024. As with the Relief Scheme, this will automatically be applied to bills (on contracts agreed on or after 1 December 2021), so there is no maths involved for business managers, which is a good thing because the discount calculations can get very confusing – at least for this blog writer. But I’m going to give it a go anyway!
Let’s focus on electricity. The government’s new wholesale threshold for electricity is 30.20p per kWh, meaning if your wholesale rate is more than this you are entitled to the discount. However, instead of the government paying the difference, you will get a maximum 1.961p/kWh discount, which essentially just means you get 2p taken off for every kWh you use, assuming your wholesale rate is above 30.2p/kWh.
In this example, you can see how this new scheme is barely scraping the surface…
A small school might use 8MWh of electricity each month. Let’s assume that back in the day before electricity went the way of the Freddo, their tariff was £0.18. 8MWh per month at £0.18 would make a monthly bill of £1440 (plus VAT and other charges).
Now let’s assume that they agreed a new tariff of £0.70 in August 2022. For 8MWh per month that is a new monthly unit cost of £5,600. With the soon-to-be-defunct Relief Scheme, they would have been eligible for up to £2,970 monthly, taking their bill after the government assistance to £2,630.
But from April 2023 the Relief Scheme is no more, now we have the Discount Scheme. That same pub would now only be eligible for a discount of up to £1880 per year or about £157 a month. This means that their monthly electricity bill has gone from £1,440 before the energy crisis to £2,630 to a whopping £5,443.
That’s an increase of 280%.
Schools have already had to double their energy budgets and with the Relief Scheme ending they are likely going to need to double them again. This means that becoming more energy efficient is no longer a choice, it is a necessity. The savings that they could make will not be enough to offset the new prices, but they might mean the difference between bankruptcy and survival.