Business energy bills to be capped under new gov scheme

The government has unveiled a new plan that is set to cap wholesale energy bills for businesses for an initial six-month period from 1 October. 

The Government Energy Bill Relief Scheme, unveiled today (21 September) by business secretary Jacob Rees-Mogg, will reportedly bring support for households, businesses and public sector organisations facing rising energy bills in Great Britain and Northern Ireland.

Under the scheme, the government will provide a discount on wholesale gas and electricity prices for all non-domestic customers, including all UK businesses, the voluntary sector and the public sector, whose current gas and electricity prices have been “significantly” inflated in light of global energy prices. 

According to the government, the support will be equivalent to the Energy Price Guarantee put in place for households.

The government will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will also apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period. The savings will be first seen in October bills, which are typically received in November.

As with the Energy Price Guarantee for households, the support will automatically be applied to bills.

To administer support, the Government has set a Supported Wholesale Price, which is expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter.

Prime Minister Liz Truss said: “I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs and livelihoods.

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

Chancellor Kwasi Kwarteng said: “We have stepped in to stop businesses collapsing, protect jobs, and limit inflation. And with our plans to boost home-grown energy supply, we will bring security to the sector, growth to the economy and secure a better deal for consumers.”

Rees-Mogg added: “We have seen an unprecedented rise in energy prices following Putin’s illegal war in Ukraine, which has affected consumers up and down the country and businesses of all sizes.

“The help we are already putting in place will save families money off their bills, and the Government’s plans for businesses, charities and public sector organisations will give them the equivalent level of support. This, alongside the measures we are taking to boost the amount of domestic energy we produce to improve both energy security and supply, will increase growth, protect jobs and support families with their cost of living this winter.”

Matthew Fell, CBI chief policy director, said: “We welcome government’s quick and decisive action to provide hard-pressed businesses with a substantial short-term fix to a long-term problem. The package will ease worries about otherwise viable businesses shutting-up shop and smaller companies especially will benefit from the discounted rate.

“Businesses will also want to know more about the exit strategy and what happens when the six-month cap runs out. Working closely with business will be key to successful implementation. The long-run solution is to double-down on energy security and to incentivise firms to push ahead with ambitious energy efficiency programmes to lower demand.”