What the Energy Bill Discount Scheme means for housing associations and heat network customers

Over the past few months we’ve been working with our members and the government to help understand the impact of energy price rises on the social housing sector, and what support can be put in place.

The government has provided a six month discount on gas and electricity for non-domestic customers from 1 October 2022 to 31 March 2023 via the Energy Bill Relief Scheme (EBRS). This discount has been available to everyone on a non-domestic contract, including housing associations, who are on existing fixed price contracts (agreed on or after 1 December 2021), and who are signing new fixed price contracts on deemed/out of contract or variable tariffs, or on flexible purchase or similar contracts.

From 1 April 2023, the Energy Bill Relief Scheme will be replaced with the Energy Bill Discount Scheme. The Energy Bill Discount Scheme (EBDS) will be available to all eligible non-domestic customers and will apply to energy contracts entered into since 1 December 2021 (including new contracts).

Rather than capping wholesale energy prices for non-domestic customers, the Energy Bill Discount Scheme will work by discounting gas and electricity unit prices.

Eligible non-domestic consumers will receive a per-unit discount to their energy bills during the 12-month period from April 2023 to March 2024, subject to a maximum discount. The relative discount will be applied if wholesale prices are above a certain price threshold. For most non-domestic energy users in Great Britain and Northern Ireland these maximum discounts have been set at:

• Electricity: £19.61 per megawatt hour (MWh) with a price threshold of £302 per MWh.
• Gas: £6.97 per MWh with a price threshold of £107 per MWh.

The discount is calculated as the difference between the wholesale price associated with an energy contract and the price threshold. The discount is phased in when the contract’s wholesale price exceeds the floor price, until the total discount per MWh reaches the maximum discount for that fuel.

The discounts will automatically be applied by energy suppliers in the p/kWh. As with the Energy Bill Relief Scheme, you will be obliged to pass on these savings to your end users.

Energy Bill Discount Scheme for heat network customers

The Chancellor announced in the 2023 Spring Budget that through the Energy Bills Discount Scheme (EBDS) the government will provide heat network customers with a with a higher rate of relief that will ensure they do not face disproportionately higher bills when compared to customers in equivalent households who are supported by the Energy Price Guarantee (EPG).

The target rate for heat network Energy Bills Discount Scheme will be 7.83p/kwh for gas, with separate rates for electricity. This is estimated to be worth up to £380m in total, £860 for the average heat network customer.

Eligible heat network suppliers (including housing associations) with domestic customers will be required by law to apply for a specific higher Energy Bills Discount Scheme rate through a digital application portal which will open in April. Successful applications will result in an eligibility certificate for qualifying heat networks being issued to both the heat supplier and the energy supplier. 

This will help energy suppliers identify which heat networks will need to receive the higher heat network Energy Bills Discount Scheme rate. Heat suppliers will be obliged by law to pass this discount to customers in a just and reasonable way in the same way they have been doing for the Energy Bill Relief Scheme pass-through requirements.