The UK government has confirmed the price of wholesale energy for businesses and public organisations, including hospitals, schools and charities, will be slashed in an extension of the energy price cap freeze provided to households earlier this month.
The cap, which forms part of the Energy Bill Relief Scheme, was unveiled by Business Secretary Jacob Rees-Mogg and will come into force on October 1 until March 31.
In this blog, we’ll explain what the Energy Bill Relief Scheme means for UK businesses and whether it will be enough to prevent widespread economic collapse as recession fears loom.
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What is the Energy Bill Relief Scheme?
The Energy Bill Relief Scheme will provide a discount on wholesale gas and electricity prices for non-domestic customers whose current bills have increased in the face of the ongoing cost of living crisis.
The Department for Business, Energy and Industry Strategy (BEIS) claims that costs will go from £600 to £211 per MWh for electricity and £180 to £75 MWh for gas, more than a 50% reduction.
It will be partly funded by the removal of green levies and comes just weeks after the announcement of the Energy Price Guarantee (EPG) which will cap household energy bills at £2,500 a year as opposed to the £3,549 originally predicted.
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.”
Are all businesses eligible?
The Energy Bill Relief Scheme will apply to all non-domestic customers, including businesses in the voluntary sector, like charities and not-for-profit companies, and the public sector, like schools and hospitals.
It will be automatically applied for customers on a fixed contract agreed on or after April 1 this year whilst customers on a default or variable contract will receive a per-unit discount on their energy bills.
However, the level of support available for businesses on a flexible purchase contract will be calculated based on the details of the individual contract and subject to the maximum discount decided by the government.
Furthermore, customers that use alternative fuels and aren’t connected to the gas or electricity grid will be entitled to “equivalent support” which is expected to be announced shortly.
How will I know if I’m eligible?
The scheme is designed to help the majority of UK businesses tackle rising energy costs but, as always, there are some exceptions.
In the coming weeks, energy suppliers will contact non-domestic customers to inform them of their eligibility in the scheme so there is no need to contact your energy supplier to check if you’re eligible or to make a claim.
However, if you want to ensure you’re getting the maximum benefit you’re entitled to, you must check your details are correct and up to date before the cap comes into force.
Rees-Mogg hopes it will provide businesses with the same level of support that households have been given: “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,” he said.
“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.”
Will it be enough to help struggling businesses?
The Energy Bill Relief Scheme has been met with a positive response from businesses grappling with skyrocketing energy prices and worried about surviving the cost of living crisis.
It will be reviewed in January to determine whether support should be extended for struggling businesses in vulnerable sectors, like hospitality, with a review of the findings also expected to be published at this time.
The government will also deliver a mini budget later this week (September 23) which is expected to reveal further details of the scheme, including how it will be funded.
However, whilst the cap will undoubtedly provide a lifeline for millions of businesses up and down the country, it has been accused of being a short-term fix and further support will be needed to ensure firms are able to continue operating after it comes to an end.
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