The government has unveiled a new Energy Bills Discount Scheme that includes support for schools.

The new scheme is notably different from what currently exists and not all schools will be guaranteed to receive support, which could mean some see their bills rise as a result.

Here are the key details that schools need to know.

What’s changing?

Previously, the amount any business could pay was set at a certain threshold of £211 per megawatt-hour (MWh) for electricity and £75 per MWh for gas. This meant many schools saw a discount on their expected bills.

Now, though, the government has changed the system to offer a discount once you pass a certain cost threshold.

The discount offered is:

• A unit discount of up to £6.97/MWh for gas bills.
• A unit discount of up to £19.61/MWh applied to electricity bills.

However, the key detail is that this will only kick in once a threshold is passed of £107/MWh for gas and £302/MWh for electricity.

What does this mean for schools?

In essence, if a school’s unit energy costs in any existing contract with a supplier do not pass those MWh prices, they will not receive any discount.

So, for example, a school that has an electricity MWh cost of £300 will not receive a discount but one with a unit price of £330 will.

There will be a sliding scale for any school just above the two thresholds. For example, a gas contract with a unit price of £108 would receive a £1 discount or any electricity contract with a unit price of £306 would receive a £4 discount.

How many MWh units a school uses will vary by setting.

For multi-academy trusts, this could mean a significant impact on costs, especially if many are just below the threshold for support.

When will it change?

The new scheme will start on 1 April 2023 and run until 31 March 2024.

Do I need to do anything?

No - if you have a contract with a licensed energy supplier then the discounts should be applied automatically.

Why is this changing?

Previously, the government was covering the cost of any contract with prices above £211/MWh for electricity and £75/MWh for gas. The government said that had cost £18 billion so far and so was not sustainable.

Furthermore, the government argues that with wholesale costs falling, more organisations should be able to secure better rates and avoid paying the huge bills that were anticipated six months ago.

The new scheme is set to be capped at a full price of £5.5 billion based on estimated costs.

What’s the reaction been?

Mixed. Although some have welcomed the ongoing support for those facing bills at the higher end, there is still concern that many schools will face tricky financial decisions as they factor in higher bills to their calculations - especially when set again rising staff salaries too.

For schools, the key advice has been to work out what the new scheme will mean for bills and plan accordingly - and hope you can get on a better deal with lower MWh prices next time around as the overall price of energy falls.