Government sets out plan to cap business energy bills

21 September 2022 by
Government sets out plan to cap business energy bills

The government has set out details of its plan to introduce a cap on businesses' energy bills this winter.

The Energy Bill Relief Scheme will apply to all non-domestic energy bills for six months from 1 October until 31 March 2023.

The savings will be first seen in October's bills and will be automatically applied.

Under the scheme, the government has set a discounted price per unit of gas and electricity. This is expected to be £211 per MWh for electricity and £75 per MWh for gas.

The government said the "supported wholesale price is less than half the wholesale prices anticipated this winter".

The plan includes the removal of green levies paid by non-domestic customers who receive support under the scheme.

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

Customers entering new fixed-price contracts after 1 October will receive support on the same basis.

It comes after hospitality businesses warned they faced "widespread business failure" without sufficient support on energy bills.

Kate Nicholls, chief executive of UKHospitality, said: "This intervention is unprecedented and it is extremely welcome that government has listened to hospitality businesses facing an uncertain winter. We particularly welcome its inclusiveness – from the smallest companies to the largest – all of which combine to provide a huge number of jobs, which are now much more secure.

"The government has recognised the vulnerability of hospitality as a sector, and we will continue to work with the government to ensure that there is no cliff edge when these measures fall away."

The government said emergency legislation to underpin the measures will be introduced "at the earliest opportunity" when parliament is back from recess in October. It previously promised that any support would be backdated to October if there was a delay in setting up the scheme.

A parallel scheme, based on the same criteria and offering comparable support will be established in Northern Ireland.

The government will publish a review of the measures in three months to decide where further support will be allocated after March 2023.

What will the scheme mean for bills?

A pub that signed a fixed contract in August 2022 and uses four MWh of electricity and 16 MWh of gas a month would have a current monthly energy bill of about £7,000.

The government said the difference between expected wholesale prices when they signed their contract and the Government Supported Price is worth £380/MWh for electricity and £100/MWh for gas, meaning they receive a discount of £3,100 per month, reducing their bill by over 40%.

Image: richardernestyap / Shutterstock

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