Propertymark queries if business energy support packa...

The Government yesterday unveiled its long-awaited package of energy bill support for businesses.

It will help firms including high street estate agents to reduce the cost of soaring gas and electricity bills.

Unlike domestic households, businesses don’t benefit from an energy price cap and agency trade body Propertymark had warned that its members were facing a four-fold increase in what they pay to heat and light their branches.

The Government Energy Bill Relief Scheme, announced by Business Secretary Jacob Rees-Mogg yesterday, will provide a discount on wholesale gas and electricity prices for all non-domestic customers whose current gas and electricity prices have been significantly inflated in light of global energy prices.

It will apply to fixed contracts agreed on or after 1 April 2022 as well as variable and flexible tariffs and contracts.

The scheme will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period for all non-domestic energy users.

The savings will be first seen in October bills, which are typically received in November.

As with the Energy Price Guarantee for households, customers 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.

To administer support, the Government has set a Supported Wholesale Price – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter – which is a discounted price per unit of gas and electricity.

This is equivalent to the wholesale element of the Energy Price Guarantee for households. It also includes the removal of green levies paid by non-domestic customers who receive support under the scheme.

The level of price reduction for each business will vary depending on their contract type and circumstances:

Non-domestic customers on existing fixed price contracts will be eligible for support as long as the contract was agreed on or after 1 April 2022. Provided that the wholesale element of the price the customer is paying is above the Government Supported Price, their per unit energy costs will automatically be reduced by the relevant p/kWh for the duration of the Scheme. Customers entering new fixed price contracts after 1 October will receive support on the same basis.
Those on default, deemed or variable tariffs will receive a per-unit discount on energy costs, up to a maximum of the difference between the Supported Price and the average expected wholesale price over the period of the Scheme. The amount of this Maximum Discount is likely to be around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market developments.

A parallel scheme, based on the same criteria and offering comparable support, but recognising the different market fundamentals, will be established in Northern Ireland.

Commenting on the scheme, Timothy Douglas, head of policy and campaigns for Propertymark, said: “All of our members with high street branches will be paying more for their energy bills even with the support that has been unveiled today. Without intervention, one agency says their bill would have increased four-fold.

“The discount of around 40% applies to businesses whose existing supply contracts are higher than the government supported price of £211/MWh for electricity and £75/MWh for gas. This provides some certainty for them in the short-term.

“But the energy market is predicted to remain volatile, and we are concerned about what happens once the initial six-month price cap period expires.

“The UK Government is about to announce its plan for growth – that needs to include is a longer-term energy support plan so businesses can look ahead with more confidence.”

https://www.gov.uk/government/news/government-outlines-plans-to-help-cut-energy-bills-for-businesses