Business Energy Prices To Be Cut By Half Expected Levels

September 21, 2022

Energy bills for UK businesses will be cut by around half their expected level this winter under a huge government support package.

The Energy Bill Relief Scheme will fix gas and electricity prices for all firms for six months from 1 October.

Hospitals, schools, charities and other settings such as community halls and churches will also get help.

It comes after the government announced a £150bn plan to help households with their soaring bills for two years.

It is hoped the latest support will avoid mass bankruptcies and job losses across industries.

Officials have not put an overall price tag on the latest subsidy to firms as the ultimate cost will depend on what happens to the wholesale market price between October and April, when the support expires.

Under the scheme, revealed by the Department for Business, Energy and Industry, wholesale prices are expected to be fixed for all non-domestic energy customers at £211 per MWh for electricity and £75 per MWh for gas for six months.

It's understood the scheme will be reviewed after three months with an option to extend support for "vulnerable businesses" - but it is not known what sectors come under the category.

Firms do not need to contact suppliers as the discount will automatically be applied to bills and savings will be seen from October's bills but received in November.

The scheme will apply to fixed contracts agreed on or after 1 April and variable and flexible tariffs and contracts.

Prime Minister Liz Truss said the government understood the "huge pressure businesses, charities and public sector organisations are facing with their energy bills".

"As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind," she said.

"At the same time, we are boosting Britain's homegrown energy supply so we fix the root cause of the issues we are facing and ensure greater energy security for us all."

The Energy Bill Relief Scheme will apply to all non-domestic energy customers in England, Scotland and Wales. A parallel scheme, based on the same criteria and offering comparable support, will be established in Northern Ireland.

Energy-intensive industries such as steel manufacturers have raised concerns about wholesale energy costs, which have shot up following Russia's invasion of Ukraine.

Unlike households, businesses are not covered by an energy price cap, which is the maximum amount a supplier can charge per unit of energy. It means non-domestic bills have soared even higher.

It is understood that developing a support package for business has been more complex than for households as there are a bigger variety of contracts across different sectors.

Stephen Phipson of Make UK, which represents UK manufacturers, said businesses would "warmly welcome" the support.

"Government has delivered a scheme which is simple to understand, giving reassurance to the business sector and making immediately available the much-needed help companies have been calling for across the board at a time energy costs were spiralling out of control."

However, Mr Phipson warned that energy prices were likely to remain high for more than six months and firms may need "support for a longer period if we are to protect jobs and remain competitive".

Source: BBC
Image source: Pixabay

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