The government is to discount wholesale gas and electricity prices by up to half for all UK businesses in a new Energy Bill Relief Scheme announced today.
Hoping the measures will stop a raft of closures, the price reduction level will vary for each business depending on their contract type and circumstances.
For business on existing fixed contracts agreed on or after 1st April 2022 the discount is expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter.
Businesses on other tariffs, such as default, deemed or variable, will receive a per-unit discount on energy costs likely to be around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market developments.
The government says it is working with suppliers to ensure all customers in England, Scotland and Wales are given the opportunity to switch to a fixed contract/tariff for the duration of the scheme if they wish.
Those not connected to the gas or electricity grid and that use alternative fuels will also receive equivalent support with further details to be announced shortly.
The discounts will apply for an initial six-month period, running from 1st October 2022 to 31st March 2023. The savings will be first seen in October bills, which are typically received in November.
As with the Energy Price Guarantee for households, businesses do not need to take action or apply to the scheme to access the support. Support (in the form of a p/kWh discount) will automatically be applied to bills.
A parallel scheme, based on the same criteria and offering comparable support, but recognising the different market fundamentals, will be established in Northern Ireland.
The scheme will be reviewed in three months to decide on support after March 2023.
Prime minister Liz Truss said: “I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs and livelihoods.
“As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind.
“ At the same time, we are boosting Britain’s homegrown energy supply so we fix the root cause of the issues we are facing and ensure greater energy security for us all.”
Chancellor Kwasi Kwarteng said: “We have stepped in to stop businesses collapsing, protect jobs, and limit inflation.”
Kate Nicholls, CEO of UKHospitality, added: “This intervention is unprecedented and it is extremely welcome that government has listened to hospitality businesses facing an uncertain winter. We particularly welcome its inclusiveness – from the smallest companies to the largest - all of which combine to provide a huge number of jobs, which are now much more secure.
"The government has recognised the vulnerability of hospitality as a sector, and we will continue to work with the government, to ensure that there is no cliff edge when these measures fall away.”