Month: March 2023

The new Energy Bills Discount Scheme replaces the Energy Bill Relief Scheme which came to an end on 31 March 2023. The new scheme will offer support to eligible non-domestic energy customers, including UK businesses, the voluntary sector, for example charities, and the public sector such as schools and hospitals from 1 April 2023 – 31 March 2024.

The new scheme has been designed to help support businesses over the next 12 months whilst at the same time limiting the taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion based on estimated volumes.

Under the new scheme, 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 with a price threshold of £107 per MWh and a unit discount of up to £19.61/MWh applied to their electricity bill with a price threshold of £302 per MWh. The relative discount will only be applied if wholesale prices are above the stated price thresholds.

The government has also confirmed that a substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries. These businesses will receive a gas and electricity bill discount based on a supported price which will be capped by a maximum unit discount of £40/MWh for gas with a price threshold of £99 per MWh and £89/MWh for electricity with a price threshold of £185 per MWh. This discount will only apply to 70% of energy volumes.

As with the original scheme, suppliers will automatically apply reductions to the bills of all eligible non-domestic customers.

The recent rise in inflation and interest rates underlines the fact that the UK and world economies are still suffering from the effects of the continuing war in Ukraine.

Accordingly, if you have managed to retain profits in your business this buffer will help to see you through difficult trading periods as we endeavour to emerge from current challenges.

How long these reserves will last depends on how effectively you manage the process.

Planning is absolutely vital.

You need to figure-out what your short-term prospects for trading are likely to be and then quantify the minimum level of costs that you will need to carry in order to meet:

• existing fixed commitments, rent for example, and
• other variable costs to deliver any future trade.

If these calculations reveal that you will be trading at a loss for an extended period, the only way your business can survive is if:

• your retained profits and personal capital introduced cover these losses; and
• if reserves are exhausted, you are prepared to borrow to fund any shortfall.

Having real-time data at your fingertips will help, as will creating a forecast or budget for at least the coming year to see how expected trading will affect cash flow and solvency.

Please call, we can help you consider your options.

Britain’s rollout of clean, affordable, home-grown energy is moving full speed ahead, with the UK government offering £205 million in its latest renewables auction, boosting energy security, growing our economy and powering more of Britain from Britain.

The Contracts for Difference (CfD) scheme is the government’s flagship mechanism for supporting new British low-carbon electricity generation projects, so far awarding contracts to projects totalling nearly 27GW of low carbon capacity. This has helped accelerate plans to diversify, decarbonise and domesticate our energy supplies, with the last round (AR4) securing almost 11GW of low carbon capacity – enough to generate sufficient electricity to power 12 million British homes.

A recent announcement confirmed a budget of £205 million for the fifth CfD allocation round – which is the first CfD auction to run annually – confirms another year of significant financial backing by government for green industries and jobs. This will bolster investment into the sector every year, helping to support green energy and jobs of tomorrow, level up Britain, and replace expensive fossil fuels with cheaper, cleaner, domestic sources of energy.