Valid from October 1, the government’s Energy Bill Relief Scheme is a six-month plan for businesses and other non-domestic energy users to receive a discount on wholesale gas and electricity prices on fixed contracts agreed on or after 1 April 2022, plus deemed, variable and flexible tariffs and contracts, subject to a review after three months.
The government mandated Supported Wholesale Price is expected to be £211 per MWh for electricity and £75 per MWh for gas, which is less than half the wholesale prices anticipated this winter.
Today’s announcement follows the Energy Price Guarantee for household energy users announced in parliament on September 8 by PM Liz Truss.
Under these plans, suppliers are limited to what they can charge for units of gas and government estimates that a typical UK household will pay no more than £2,500 annually on their energy bill for two years from October 1st. Further savings from both schemes will come with temporarily removing green levies.
“Cutting energy bills in half is a lifeline for businesses this winter,” commented Simon Tucker, global head of energy, utilities & resources at Infosys Consulting. “With operating costs shielded against the excesses of energy price rises, many companies will now be able to avoid potential job losses and bankruptcy.”
Echoing this view, Neil Clifton, managing director of Rowley Regis-based Cube Precision Engineering said: "Without intervention, our energy bills were due to rise from £12,000 in August 2021 to a massive £44,000 this year based on a similar level of consumption. On top of lots of external pressures, inflation and supply chain disruption, this would have been the last thing we needed.”
Clifton added: “Our bill will now be between £23k to £25k based on it being capped at £0.21p per kWh – not ideal, but something we can manage.”
Sounding a note of caution, Stephen Morley , president of The Confederation of British Metalforming (CBM) said: “Firstly, it is only for six months with a review in three, so we need clarity on what happens after that, and we certainly don’t want to see other sectors get preferential treatment when the review is carried out.”
He added “Another point that everyone appears to be missing is that this clearly states it is based on wholesale costs. This only equates to 35 per cent of the cost, the rest is made up of 45 per cent on delivery, 15 per cent on taxes and state charges and 5 per cent on purchasing. This could be open to interpretations by different suppliers and needs direction or, better still, regulation.”
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