Businesses are searching for strategies to help them save money on their energy bills; after all, for many, bills have almost doubled over winter, and forecasts are predicting them to rise again by as much as 40% next year. This has led many businesses to wonder, are business energy prices capped? The energy price guarantee has capped prices to protect households, but do these protections apply to companies? What help is available for businesses during these times of economic uncertainty?
Are business energy prices capped?
Over the last 12 months, energy prices have risen considerably, forcing businesses and households across the UK to be pressured with record-high energy bills. The latest government initiative, The Energy Price Guarantee helps shield homes from the cost of rising energy bills. This initiative protects domestic energy customers by limiting the amount energy suppliers can charge per unit of energy used. As a result of these energy price caps, the typical household energy bill in Great Britain is reduced to approximately £2,500 per year and £1,950 per year in Northern Ireland (for dual-fuel gas and electricity bills).
However, it is important to note that business energy rates have no price cap. That being the case, the government has introduced an Energy Price Relief Scheme to assist with businesses’ energy bills throughout the United Kingdom.
What is the Energy Price Relief Scheme?
Providing energy bill relief for non-domestic customers in Great Britain, the Energy Price Relief Scheme assists businesses, voluntary sector organisations (for example, charities), and public sector organisations like schools and hospitals. However, to qualify for the assistance, your organisation must be on a new fixed-price contract, a contract with variable tariffs, a flexible contract, or a fixed-price contract agreed on or after the 1st of December 2021.
The discounts associated with the scheme will be applied to energy used between the 1st of October 2022 and the 31st of March 2023. However, this scheme does not apply to businesses that use gas or electricity to generate power that they sell to the power grid, such as power stations.
What about landlords?
If they have a domestic contract with a licensed electricity or gas supplier, landlords will benefit from the Energy Price Guarantee. As such, this benefit and cost reduction should be reflected in the price change to their tenants. If their tenants pay for their energy based on usage, they must be charged the same as the landlord pays for the power. However, if Landlords charge their tenants an all-inclusive rent (rental payments, which include a fixed charge for energy used), they should pass on the savings only if provided for in the tenancy agreement.
What caused the 2022 energy crisis?
There are numerous factors to consider regarding the cause of the 2022 energy crisis. Like any other product or commodity on the free market, energy prices are driven by supply and demand. The Global energy market is mostly composed of fossil fuels, specifically coal, natural gas, and crude oil. The United Kingdom is particularly vulnerable to the worldwide crisis due to a combination of its dependence on gas for both heating and electricity use, as well as the nationwide issue of poorly insulated housing.
However, many would argue that Russia’s use of its vast gas supplies as a weapon of war is a leading cause of the energy crisis, especially concerning the price of natural gas. However, the energy crisis covers both natural gas and electricity. The latter has seen a significant reduction in supply compared to previous years, which, when combined with the higher gas prices associated with Russia’s War In Ukraine, has led to an increase in the wholesale price of electricity.
