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The Energy Price Cap Won't Help Your Business This Winter; but the EBDS Will. 

We explain how your business could slash its bills this winter

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What is the Ofgem Energy Price Cap?

The Ofgem energy price cap is a limit on the amount of money that energy suppliers can charge customers for each unit of gas and electricity. It is set by the energy regulator, Ofgem, and is reviewed every three months.

The Energy Price Cap is calculated based on several factors, including the wholesale cost of energy, network costs, and policy costs. It is designed to protect consumers from high energy prices.

 

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Is There a Price Cap for Businesses?

There is no price cap in place for businesses in the UK. However, earlier this year, the UK Government introduced the Energy Bills Discount Scheme, known commonly as the EBDS, to help businesses with their energy bills.  

The new scheme offers a discount on non-domestic gas and electricity unit rates; this means that it's this scheme that applies to your business, not the Ofgem Energy Price Cap.

 

How Does the EBDS Work?

The EBDS works by providing your business with a discount on each unit of energy you use within the time frame mentioned above. The discount applies to the wholesale cost of energy, not the retail price, and only kicks in when the wholesale cost is more than the Government-set threshold. 

If the wholesale price is less than the threshold price, your business will not get a discount. 

When you are eligible for a discount, the discount your business gets is calculated as the difference between the threshold price and the wholesale price associated with your energy contract. This might be confusing but, to make it easier to understand, we've made an example scenario below. 

If your business paid 35p for each kWh, and the Government threshold was 34p, then you would be entitled to a 1p discount for every kWh you used. So if you used 2000 units of electricity in a month, you would be discounted 2000p, or £20 through the EDBS. 

*Please note the numbers we've used above are for illustrative purposes only and are in no way associated with current wholesale prices. 

 

Is There a Maximum Discount?

Yes. The discount you receive is subject to a maximum discount which, for most non-domestic users, is set at:

  • electricity - £19.61 per megawatt-hour (MWh) with a price threshold of £302 per MWh.
  • gas - £6.97 per megawatt-hour (MWh) a price threshold of £107 per MWh

The maximum discounts mean you can only save a certain amount on each unit of energy your business uses, which is something you need to keep in mind.

 

Do Business Tariffs Change Every Month?

Business tariffs can change every month, but it's rare for them to do so. Most business tariffs are fixed-term contracts, which means that the price per unit of energy stays the same for a set period.

However, some business tariffs are variable-rate tariffs. This means that the price per unit of energy can change each month, depending on the wholesale price of energy. Variable-rate tariffs are typically less expensive than fixed-term tariffs, but businesses could be exposed to higher energy prices if the wholesale price of energy increases.

 

How to Reduce Your Business Energy Costs

Even though there is no price cap in place for businesses, there are a number of things that your business can do to reduce your energy costs, such as:

  • Switching to a more energy-efficient tariff
  • Investing in energy-efficient equipment
  • Making changes to your business practices, such as turning off lights and appliances
  • Implementing energy-saving measures, such as insulation and draught-proofing

 

Find the Best Energy Deal for Your Business

If you want to find out if you could save money on your business's energy bills, all you have to do is answer some basic questions about your business and, using this information, we can show you the tariffs that are best suited to you.

Our service is 100% free and non-committal, so to get started, just tap the button below now!

 

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Energy FAQs


The following steps are likely to help you save money on your business energy bills:

  • Switching to a more energy-efficient tariff
  • Investing in energy-efficient equipment
  • Making changes to your business practices, such as turning off lights and appliances

There is no price cap in place for businesses in the UK. However, the government introduced the Energy Bills Discount Scheme, which has provided businesses with a discount on their energy bills since April 1, 2023.


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