For residents on heat networks, Government support during the energy crisis under the Energy Bill Relief Scheme (EBRS) has fallen short of the support awarded to customers who receive their heat and hot water through a standard supply e.g. individual gas boiler.
However, the Government acknowledged this and in April 2023 launched the latest support scheme, the Energy Bill Discount Scheme (EBDS). Unlike its predecessor, the new scheme, which runs until 31st March 2024, provides specific support for customers on heat networks. This post will outline what the EBDS is, the support available for residents who live on heat networks and how and when residents can expect to receive this discount.
What is the Energy Bill Discount Scheme (EBDS)?
The EBDS, which came into effect on 1st April 2023 and will run until 31st March 2024, is the latest energy bill support scheme for customers who are not protected by the Ofgem energy price cap. The EBDS aims to level up the support available to residents on heat networks by capping the commercial retail price of gas to 7.83p/kWh and 34p/kWh for electricity, something which the previous scheme (EBRS) did not do (the cap was previously based on the wholesale price).
However, unlike the Ofgem price cap, these capped costs are not what the end customer will be paying. This is because the gas (and electricity) needs to be converted to heat. The heat is then charged on a pence per kWh basis through your tariff. The process of converting the gas to heat and then distributing the heat involves losses, this is usually expressed as the heat network efficiency and has a big impact on the cost of heat. For example, if your gas input price is 10p/kWh and the heat network you live on is 50% efficient, your heat tariff is likely to be around 20p/kWh.
A good heat network operates at about 65% to 70% efficiency and the Government has based the support they give to heat network customers via the EBDS on a heat network which operates at around 64% efficiency, to give equivalency with the Energy Price Guarantee (EPG), the support standard domestic customers receive.
However, many heat networks are currently running at below this level of efficiency, some as low as 24% efficient, which increases the amount that is charged to the residents.
The EBDS does afford residents on heat networks some protections from the recent eye-watering gas prices, as it means that your heat tariff will be based on input costs which are no higher than the Government capped rates (7.83p/kWh for gas and 34p/kWh for electricity).
Will all residents who live on heat networks receive energy bill discount under the EBDS?
Unfortunately, not all residents will qualify for the support. This is completely dependent on the retail rate (p/kWh) at which your heat supplier has purchased your gas and electricity. At present, we are seeing retail rates at much lower levels than pre- December 2022 which means that it’s likely that your heat supplier has secured rates which are now below the capped rates determined by the Government under the EBDS. If this is the case, then you will not be eligible for the discount as you are already benefitting from lower rates.
It’s important to remember however, that the retail rate is not the rate you pay via your tariff and that your tariff is likely to be higher as it accounts for system losses.
How can eligible residents on heat networks claim their EBDS discount?
Much like the previous EBRS, residents on heat networks do not need to take any action to claim the EBDS discount, as your building owner or the company that manages the heat network, referred to as the heat supplier in the regulation, are under a legal obligation to register for EBDS support. Once your heat suppliers’ application for support has been approved, the discount will automatically be applied to the scheme gas and electricity bill and any discount will then be passed to you through your heating bills.
When will I receive my EBDS discount on my bills?
Although the EBDS support replaced the EBRS on 1st April 2023, many heat suppliers were waiting for the Government portal, which opened on 26th April 2023, to be able to process any applications for discount.
Once your heat supplier has submitted their application for the discount, they must wait for confirmation from the Government that the scheme meets the necessary requirements and is eligible for the discount. All heat suppliers must have completed their applications no later than 25th July 2023, as this is when the portal closes.
Following confirmation, your heat supplier must then wait for their energy supplier to apply the discount to their total energy bill (not the bill you as a resident receive).
Once this discount has been applied, your heat supplier can then begin to pass any discount on to you as a resident, through your bills. This bulk discount will be fairly spilt across all residents on the site.
As a result, it is likely that residents will not begin to see any benefit from the EBDS until late August or September at the earliest. However, under the EBDS, heat suppliers are required to backdate any discount to 1st April 2023, so although residents may have a long wait before they see any reductions to their bill, they will be backdated for the discount they did not receive in the period between 1st April onwards.
What can Switch2 do to help with energy bills?
We understand the financial impact the price rises are having on household budgets and are committed to supporting our customers throughout this difficult period. If you need support with the rising energy costs, our dedicated customer service teams are here to help.
Switch2 operate in line with the Heat Trust and can provide customers with independent advice based on their individual circumstances, or set-up payment plans to make managing the cost easier.
We also work alongside many charities and not for profit organisations, who can provide expert energy advice and financial assistance to customers, including energy efficiency tips on how to reduce bills and financial grants for eligible households, to help with future payments.
If you’d like any further information about the rising cost of energy bills, please visit our energy crisis page which provides answers to frequently asked questions and support information.
We understand it’s a difficult time for many households and we will do what we can to support throughout.