UK

Business energy bills to be capped from October 1

In a multi-billion pound package of support, a significant discount will be applied to wholesale costs for all non-domestic customers.

Prime Minister Liz Truss said the package of support to protect firms from soaring energy bills will make sure businesses “are able to get through the winter”.

Ms Truss said shops and pubs will benefit from support with their energy bills beyond the initial six-month scope of the scheme.

She said: “We know that businesses are very concerned about the level of their energy bills.

“That’s why we are putting in place a scheme for business that will be equivalent to the scheme for households to make sure that businesses are able to get through the winter.

“We’re going to review it after six months. We’ll make sure that the most vulnerable businesses like pubs, like shops, continue to be supported after that.”

She said the initial scheme “will apply from the first of October to make sure businesses have that security through the winter”.

The Government has set a supported wholesale price – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter – to cut bills.

The scheme will apply to fixed contracts agreed on or after April 1 this year, as well as to deemed, variable and flexible tariffs and contracts.

It will apply to energy usage from October 1 to March 31.

The savings will be first seen in October bills, which are typically received in November.

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.”

The Government said it would push through emergency legislation to underpin the new relief scheme once Parliament returns from its break for the party conferences in October.

For those on fixed-price contracts, if the wholesale element is above the new cap, the price per unit will be automatically reduced for the duration of the scheme.

Businesses with default, deemed or variable tariffs will receive a per-unit discount up to a maximum of the difference between the Government rate and the average wholesale price over the period, said officials. This ‘Maximum Discount’ is estimated to be around £405/MWh for electricity and £115/MWh for gas.

However, because this is subject to the wholesale market price, they could potentially still be subject to price increases, with Government saying it was working with suppliers to offer customers the opportunity to switch to a fixed tariff during the scheme’s duration.

Meanwhile, for businesses with flexible purchase contracts, typically some of the largest energy users, the level of reduction offered will be calculated by suppliers according to the company’s contract and will also be subject to the Maximum Discount.

Kate Nicholls, CEO of the hospitality trade body, UKHospitality, welcomed the “unprecedented” intervention, but added there must be no “cliff edge” when the scheme ends.

“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,” she said.

“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.”

This is a breaking story.

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