The Energy Bill Discount Scheme
The current support offer, the Energy Bill Relief Scheme, is due to end in March. It was announced this week that a new scheme will replace it: the Energy Bill Discount Scheme
The current support offered by the UK Government to businesses towards their energy bills is due to end in March. It was announced last week that a new scheme will replace it: the Energy Bill Discount Scheme (EDBS).
The UK Government has issued a fact sheet about the new scheme which you can read here.
To summarise our understanding of the scheme, it will run from April 2023 – Mar 2024 and:
- Applies to businesses on fixed price contracts agreed since 1 December 2021 as well as deemed / out of contract or standard variable tariffs or flexible purchase or similar contracts.
- The maximum discount for most businesses is:
- electricity - £19.61 per megawatt hour (MWh) with a price threshold (the point at which the support kicks in) of £302 per MWh
- gas - £6.97 per MWh with a price threshold of £107 per MWh
- Additional support, which will have to be applied for using a process which is yet to be defined, is being offered to energy and trade intensive industries (ETII) which will mean support up to:
- electricity - £89 per MWh with a price threshold of £185 per MWh (a much lower threshold)
- gas - £40 per MWh with a price threshold of £99 per MWh
The additional ETII support will cover 70% of energy use, according to the guidance.
It is hard to be precise in terms of what this new scheme will mean for your business vs the current scheme as it will depend on a lot of factors including the type and amount of energy used, contract status and current prices. It is clear that the support for those deemed to be energy and trade intensive (ETII) will be significantly greater than the support available to other businesses.
We have been making representations to both the UK and Scottish Governments over the past few months on the need to continue supporting the industry.
The good news for food and drink producers is that the list of businesses (developed as part of the review into Energy Bill Relief Scheme, which we input to here) includes more food and drink sectors than previous versions of ETII lists.
This is welcome but appears at first glance to have some notable, and surprising exceptions including
- Group 11.01: Distilling Spirits;
- Group 10.13: Meat and poultry meat products (including pate, soups with meat in and more);
- Group 10.3: Processing and preserving of fruit and vegetables (including jams and chutneys), among others.
The full list (as it stands) of food and drink sectors eligible for enhanced support, based on SIC code:
10.11 Processing and preserving of meat
10.12 Processing and preserving of poultry meat
10.20 Processing and preserving of fish, crustaceans and molluscs
10.41 Manufacture of oils and fats
10.42 Manufacture of margarine and similar edible fats
10.51 Operation of dairies and cheese making
10.61 Manufacture of grain mill products
10.62 Manufacture of starches and starch products
10.71 Manufacture of bread; manufacture of fresh pastry goods and cakes
10.81 Manufacture of sugar
10.82 Manufacture of cocoa, chocolate and sugar confectionery
10.85 Manufacture of prepared meals and dishes
10.86 Manufacture of homogenised food preparations and dietetic food
10.89 Manufacture of other food products n.e.c.
10.91 Manufacture of prepared feeds for farm animals
11.02 Manufacture of wine from grape
11.03 Manufacture of cider and other fruit wines
11.05 Manufacture of beer
11.06 Manufacture of malt
It would be helpful to hear from you once you have calculated the support available via the new scheme vs. what you have received under the current scheme, to see how they compare.
Our next steps, already underway, are to engage with the Scotland Office, the Department for Business, Energy and Industrial Strategy (BEIS) and HM Treasury to understand the application process and see if there is scope to widen the ETII list further.
The rationale for doing so seems strong given how many food and drink producing businesses use energy intensive processes year-round (heating, chilling, freezing, storing etc.) and are likely to have a similar trade and energy profile to those which have been included.
We do not want to see a two-tier energy subsidy system for our members who share many of the same challenges this year, and we will update as we hear more on this new scheme.
If you have any questions please contact Joe Hind at joe@foodanddrink.scot
