How the Energy Price Cap ending impacts businesses

20th Feb 2023 | Mollie Pinnington | 7 minute read

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If you're a business owner, you may be wondering what the newly announced energy discount scheme means for you. In this blog post, we'll outline what the scheme is and how it could impact your business. Whether you stand to benefit or not will depend on a number of factors, so read on to find out more.


What support is currently available for businesses?

Currently, all businesses should have been receiving a cap on the wholesale rate of their energy since October 2022 under the Energy Bill Relief Scheme (EBRS).

With the Energy Bill Relief Scheme, businesses have access to support to help them manage energy costs. This scheme has put a cap on the wholesale rate of gas and electricity for all those non-domestic fixed tariffs. If your business is currently on a fixed rate contract will have been receiving a cap on the wholesale element of your gas and electricity bill. This has been agreed at 21.1 p/kWh for electricity and 7.5 p/kWh for gas.

Those on deemed or variable contracts have benefitted from a maximum discount on energy bills since October 2022. The discount of 34.5p/kWh is applied to electricity and 9.1p/kWh when it comes to gas.

The Energy Bill Rebate Scheme (EBRS) has lately offered some relief to businesses with energy bills. m The scheme originally started back in October 2022 and will be running up until the end of March 2023. At this point, it will be sadly coming to an end, however, is not all bad news, as it will be replaced by the Energy Bill Discount Scheme which begins on the 1st of April. This scheme will however be a major reduction in support compared to the EBRS.

To find out more information on the EBRS- continue reading here

How will the introduction of the Energy Bill Discount Scheme affect your business?

The UK Government's Energy Bill Discount Scheme(EBDS) is a major development that could have a massive impact on small to medium-sized businesses. With a 90% in reduction in support, many businesses could struggle when it comes to April.

The EBDS will discount business energy bills by a certain amount once they have gone over a threshold price:

  • For electricity if the wholesale portion of the bill rises over 30.2p/kWh then a maximum of 1.96p/kWh discount.
  • For gas if the wholesale price rises over 10.7p/kWh then a maximum discount of 0.697p/kWh will be applied.

EBDS is going to run up to 12 months from 1st April 2023 to 1st March 2024 for businesses that signed after the 1st of December 2021.

The impending reduction of support available to businesses could lead more to struggle with energy bills. With the Energy Bill Discount Scheme providing only a modest amount of financial assistance when market prices rises above a certain level, it is clear that those already facing hardships due to climbing energy costs will be feeling the strain even more over the coming months. Unless decisive action is taken to add a permanent cap on wholesale gas and electricity prices, it is expected that this issue will continue to affect vulnerable businesses in the long term.

Unfortunately, many businesses remain in a precarious position with the potential for further strain due to the new scheme's reduced support. Smaller businesses are expected to be particularly affected by higher energy prices, increasing the financial strain they face. Even if business owners were managing these bills prior to April, they may find themselves struggling to make ends meet in the future. Despite how helpful it could potentially be moving forward, realistically this scheme is not going to offer as much aid as many companies may have needed at this time.

To see more about the EBDS - continue reading here

How does your business access support?

The energy support does not require any action on your part - it is automatically applied if you signed your contract after the 1st of December 2021 and business customers should not pay any money to receive it. Any offer that uses alternative terms than this should be disregarded immediately, to ensure that business owners are properly equipped to take advantage of such supportive measures without becoming in danger of being adversely scammed.

With the introduction of business energy support, businesses should be aware of the potential for energy scams. Unfortunately, as is often the case with government initiatives, there will always be those who use that opportunity to deceive and take advantage. Business owners or whoever handles energy bills must stay vigilant, particularly when businesses are promised a discounted rate for their energy bills.


Why has the government reduced energy support?

The government is always looking for ways to manage their financial resources in a responsible and efficient way. Balancing energy support with other commitments made by the administration requires tough choices, but ultimately these decisions create a more stable environment for everyone.

It is no secret that the government has been reducing its support for businesses, and it appears that the costs associated with these packages is becoming too much to bear. The EBRS scheme estimated to reach £18 billion has already caused concern among government members, while the EBDS stimulates an estimated cost of £5.5 billion. In order to protect tax payers from the unpredictability of the energy market, the government deemed its original business package unsustainable. It remains to be seen how big a blow this will be for getting Britain back on track post-pandemic, but one thing is for certain: careful decisions must be made in order to ensure a viable future for UK businesses.


Is the EBDS different for those on default or variable tariffs?

Despite the current volatility in energy prices, customers can expect to enjoy savings no matter what kind of contract they are on. Being on a fixed-rate contract offers customers additional protection, allowing them to avoid abrupt price changes and protect their budget. Those who choose to sign onto a variable contract should keep a close eye on market trends and be mindful that their rates could fluctuate at any moment. Regardless of the contract type you choose, you will be set to benefit from this discount opportunity.


Will there be extra support for SMEs and smaller businesses?

Small businesses have been dealt yet another blow due to the lack of protection when it comes to energy bills. After expecting to have increased aid and guidance, these businesses have fallen victim to large companies pushing up prices and leaving them digging into their own reserves. Due to the lack of legislation or subsidies, small businesses can find themselves paying increasingly high costs for the same usage of energy as those in charge of larger enterprises. This is unfair and many believe that something should be done to offer more support in regard to energy payments moving forward.


Why have I not received any energy support?

If you feel like you should have received energy support but did not, there are a few things to consider. You should contact your energy supplier as they may be able to answer questions about your situation and/or help identify other sources of assistance. Also, if you are signed up with Online Energy you can contact us to see if our support team can do anything to help.


what happens If I can't afford my business energy bills?

If you find yourself in a situation where you suddenly cannot afford your business energy bills, the most important thing to do is not to panic. Remember that even in difficult times, there is always a solution available. Reach out to your energy provider directly to explore affordable payment plans or special discounts specifically built for businesses in need. Additionally, there are numerous governmental and private grants of funding available that are designed specifically to support businesses struggling with paying their utilities. Utilizing these programs can give your business the time it needs to financially recover from an unexpected setback and ensure that you don’t interrupt services necessary for running a successful and sustainable organization.


What can Online Energy do to support your business?

Online Energy provides essential services that can support your business. We offer 24/7 customer service and free consultations, so you can rest assured knowing that you will have experienced professionals taking care of every aspect of your business's energy contracts. With Online Energy's help, you can bring your business's savings to new heights.

If you're concerned about your business energy bills, Online Energy can provide assistance every step of the way. From providing tailored advice on how best to access support, right through to helping you compare rates and make an informed decision - we'll be able to reduce your costs and put money back into your pocket.

In these uncertain times, it's reassuring to know that there are measures in place which allow small businesses to benefit from cost savings on their energy bills while taking advantage of additional financial support offered by the local and central government. Whether you’re currently on default or variable tariff plans doesn't matter - Online Energy will help you get access to support so that you can successfully manage your energy costs.

We hope this article has been useful in clarifying any confusion surrounding governmental support for business energy bills now and in the future. Whatever your financial situation may be, feel free to reach out for our guidance on how best to use energy productively and within budget - we're here for you!

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