The Energy Bill Relief Scheme will cover wholesale energy prices for all businesses, who will see the wholesale costs that energy suppliers can incorporate into their bills capped for six months from 1 October. It will not determine the final energy bill paid by the business consumer.
The latest intervention in the energy market pricing structure comes after the government recently announced a £150bn two-year plan to help households with domestic gas and electric bills. The wholesale price cap for businesses will be backdated to protect those organisations who have already had to sign up to ‘excessive’ fixed term pricing deals with suppliers.
Hospitals, care homes, schools and other non-commercial organisations such as churches and charities will also receive the support.
Kwasi Kwarteng will deliver more details on the economic implications of this latest subsidy to businesses on Friday in his Fiscal Statement. The ultimate cost of the aid package will depend on what happens to the wholesale market price between October 2022 and April 2023, when the support is due to expire.
Under the Energy Bill Relief Scheme, revealed by the Department for Business, Energy and Industry, wholesale prices will be fixed for all non-domestic energy customers at 21.1p per kwh for electricity and 7.5p per kwh for gas for six months from 1 October. Firms do not need to contact suppliers as this will be automatically applied to them for all energy contracts signed since 1 April, as well as to deemed, variable and flexible tariffs and contracts.