UK businesses given cap halving price paid for energy this winter | Energy industry
Businesses have been given an emergency package of government support including halving the price they pay for electricity from October 1 to help them get through the winter.
The government has taken steps to provide concessions on wholesale electricity prices for public sector organizations including companies, charities and schools.
Under the plan, they will be given assistance for six months to protect them from rising bills. After that more support will be given to companies in weaker industries.
Announcing an energy aid package earlier this month, Liz Truss said the government would “launch a new scheme for all non-domestic customers who would otherwise be at the mercy of higher prices driven by Russia’s illegal war in Ukraine”. It also said: “Most non-domestic customers in the UK are on fixed-price energy contracts.”
Regulator Ofgem’s energy price cap for the average household did not apply to businesses, meaning firms faced bills that were due to rise faster than domestic users.
The government has now announced a “supported wholesale price” – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices expected this winter. The changes will apply to new contracts from October 1 and fixed contracts taken from April 1
The government said those with default, deemed or variable tariffs will get per-unit rebates on energy consumption, up to the maximum of the difference between the supported price and the average expected wholesale price during the scheme period. This rebate can amount to around £405 per MWh for electricity and £115 per MWh for gas.
For businesses on flexible purchase agreements, typically some of the largest energy-consuming businesses, the proposed reduction level will be calculated by suppliers according to the specifics of that company’s agreement.
The Truss said the support package to protect firms would ensure businesses “are able to get through the winter”.
Before the support was announced, small business owners across Britain told the Guardian of sleepless nights and fears they won’t survive the winter as their energy bills rise.