UK businesses have been given a boost this morning as it has been revealed that the government will cap the wholesale cost of energy. As a result, energy suppliers will only be able to charge £211 per MWh for electricity and £75 MWh for gas. This is less than half the anticipated cost for this winter.
This new Energy Bill Relief Scheme will hopefully allow businesses, schools and hospitals to navigate their way through the winter months in a more manageable way. It should protect jobs and prevent thousands of businesses from closing down.
National Chair of the Federation of Small Businesses, Martin McTague said:
“Small businesses called for decisive action – now the government is delivering. With small firms the least able to avoid closure and 16 million employees relying on them, Ministers have listened to our community and got this big call right. Now it’s up to energy retailers to live up to the high bar set today and make sure this help reaches those on the ground.”
Are you eligible for this reduction?
If you are a business owner in the United Kingdom, then you don’t have to do anything to gain access to this discounted price. Instead, all bills from the 1st of October 2022 will automatically have the discount applied to them.
The capped price will be available to businesses on a variable or flexible tariff, as well as those that agreed to a fixed contract on or after the 1st of April 2022. If you are still on a fixed contract that was agreed upon prior to this date, then you will continue to pay that fixed sum each month.
The discounted wholesale cost will be in effect for an initial six-month period from October 2022 to March 2023. The government has announced that they will publish a review of the scheme in three months where future support after March 2023 will be outlined.
For those businesses that aren’t connected to the gas or electricity grid, a further announcement is expected shortly concerning the support they will receive.
Prime Minister reaction
It’s been a busy start to life as Prime Minister for Liz Truss, with the passing of Queen Elizabeth II and the announcement of the Energy Price Guarantee for UK households. Upon the announcement of this latest government scheme, she 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.”
Tackling the cost of living crisis
The news this morning follows the announcement last week that household energy bills are to cost, on average, £2500 a year from the 1st of October 2022. This new freeze is set in place for two years and will save the typical UK household around £1000 per year, based on the cost of gas and electricity from October.
This new bill freeze is in addition to the £400 grant that every household in the UK will have access to from October to help with crippling energy bills. The grant will be paid over a six-month period from October to March and together with today’s announcement, should ensure energy bills stay close to what they currently are.
While inflation soars and wages stagnate, the government are hopeful that this intervention will at least ensure families make it through the winter months with food on the table and heating in their homes.
It remains to be seen how effective these new cost-saving schemes will be, but at least it appears that the UK Government are finally starting to provide solutions to the mess the country finds itself in.
Considering this new scheme for businesses is only set to run for an initial six-month period, it is difficult to see how much peace of mind this will actually give business owners.