Energy Bills Cap for Businesses

Energy Bills Cap for Businesses

This morning the government revealed more details about its plan to help businesses with energy bills over the next six months.  The government’s press release with detail, can be found here.

According to that press release, the government is providing a discount on wholesale gas and electricity prices for all non-domestic customers. It 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 apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period for all non-domestic energy users. The savings will be first seen in October bills, which are typically received in November.

The government has set a Supported Wholesale Price:

  • £211 per MWh for electricity
  • £75 per MWh for gas.

Some more information:

  • Non-domestic customers on existing fixed price contracts will be eligible for support as long as the contract was agreed on or after 1 April 2022. Provided that the wholesale element of the price the customer is paying is above the government supported price, their per unit energy costs will automatically be reduced by the relevant p/kWh for the duration of the scheme.
  • Those on default, deemed or variable tariffs will receive a per-unit discount on energy costs, up to a maximum of the difference between the Supported Price and the average expected wholesale price over the period of the Scheme. The amount of this Maximum Discount is likely to be around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market developments.
  • For businesses on flexible purchase contracts, the level of reduction offered will be calculated by suppliers according to the specific of that company’s contract and will also be subject to the Maximum Discount.

If you are not connected to gas or electricity grid, equivalent support will be coming for those using heating oil or alternative fuels in due course. There will also be a review of the scheme in three months to inform decisions after March 2023 – the review will focus in identifying the most vulnerable non-domestic customer