Energy bills support for businesses

Date : 22 September 2022

The government has announced an Energy Bill Relief Scheme to fix electricity and gas prices for all businesses, charities and public sector organisations for an initial six months from 1 October.

Details of the scheme include:

  • Wholesale prices will be fixed for all non-domestic energy customers at £211 per MWh for electricity and £75 per MWh
  • The discount will be automatically applied to bills
  • The scheme will be reviewed after three months. There will be an option to extend support for “vulnerable businesses” (not yet defined)
  • The scheme applies to fixed contracts agreed after 1 April and variable and flexible tariffs and contracts
  • This applies to all non-domestic energy customers in England, Scotland and Wales. A similar scheme will be established in Northern Ireland (where the energy market is subject to EU rules)

This follows announcement of the Energy Price Guarantee, which will limit the average annual household energy bill to £2,500 for two years. See here for more details.

IGD Viewpoint

This support package will provide significant relief to businesses across the food supply chain. Both the Energy Bill Relief Scheme and the Energy Price Guarantee are likely to have a significant beneficial impact on inflation.

However, it will add significantly to public sector borrowing. Government borrowing for August 2022 was £11.8bn, twice the level forecast by the Office for Budget Responsibility. High inflation has led to increased base rates and higher interest on government debt. Debt interest payable was £8.2bn, the highest August figure since monthly records began in April 1997.

Businesses will want to know more about what will happen at the end of the six month period and which businesses will qualify for extended support.

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