LONDON (Parliament Politics Magazine) – Under a significant government support package, energy bills for businesses in the UK will be reduced by about half this winter from their expected level.
From October 1 for six months, all businesses will pay a fixed amount for gas and electricity under the Energy Bill Relief Scheme.
Additionally receiving assistance are hospitals, schools, charities, and others including community centres and churches.
It follows the government’s recent announcement of a £150 billion plan to assist households with their skyrocketing bills for two years.
It is believed that the most recent aid will prevent widespread bankruptcies and job losses across industries.
An overall cost to the most recent subsidies to businesses has not been signed upon by the officials because how the wholesale market prices behave between the months of October and April when the support ends, will decide the final cost.
The Department for Business, Energy, and Industry disclosed the plan, which calls for wholesale energy prices to be set for all non-domestic energy users at £75 per MWh for gas and £211 per MWh for electricity for a period of six months.
The understanding is that the programme will be evaluated after three months with the possibility of extending help for “vulnerable businesses”; however, it is unclear what industries would fall into this category.
Businesses do not need to get in touch with their suppliers because the reduction will be automatically applied to bills, and savings will be shown on bills for October but will be received in November.
Variable tariffs, flexible tariffs and contracts, as well as fixed contracts signed on or after April 1st, will be covered by the scheme.
The government is aware of the “great pressure” that businesses, public sector organisations and charities are under due to high energy costs, Prime Minister Liz Truss said.
She stated that starting in October, as they were doing for consumers, their new strategy would keep their energy bills low, offering certainty and peace of mind.
At the same time, they were increasing Britain’s domestic energy production in order to address the underlying causes of the problems they were facing and provide more energy security for everyone.Â
All non-domestic energy consumers in England, Scotland and Wales will be eligible under the Energy Bill Relief Scheme. In Northern Ireland, a counterpart programme based on the same offering and criteria, providing equal assistance will be established.
Energy-intensive industries, steel producers, for example, have expressed concern about rising wholesale energy prices as a result of Russian invasion in Ukraine.
An energy price cap which is the most a supplier is permitted to charge per unit of energy, unlike household, does not cover businesses. It implies that non-domestic bills have increased even more.
It is understood that creating a support programme for businesses has been more difficult than for households due to the greater range of contracts across various industries.
Businesses would warmly embrace the support, said Stephen Phipson of Make UK, which represents UK manufacturers.
The government has created an easy-to-understand programme that reassures the business community and makes immediately available the critical assistance that businesses have been requesting across the board at a time when energy prices were running out of control, he said.Â
But Mr. Phipson cautioned that the likelihood of a longer-than-six-month energy price increase meant that businesses might want assistance for a longer period if they were to protect jobs and remain competitive.
