We are deeply saddened to hear about the loss of Queen Elizabeth II. A truly inspirational and remarkable lady, and our longest reigning monarch. Our thoughts are with the Royal Family on this sad day.
In light of the Queen’s passing business matters feel somewhat less important. Nevertheless, we recognise that following Liz Truss’ announcement yesterday business owners might be wondering what the implications may be for them and their businesses.
New PM Liz Truss gave an energy announcement as part of her first duties as Prime Minister. During this, she declared that a new energy price cap for homes and businesses will be set from 1st October for six months with extra support being considered for vulnerable business sectors such as schools and charities.
This is a great relief for all businesses after a turbulent time with prices reaching worrying highs, leading to business owners fearing the worst. During her speech, the new PM supported businesses and public bodies giving them the “equivalent support” to households for the next six months. There will also be an extra focus given to vulnerable sectors that have struggled due to rising prices, with extra support to be given upon review.
As well as a price cap for businesses there has also been a price “freeze” set for domestic energy customers. This comes as the rise in gas and electricity prices over the past few years has caused a cost-of-living crisis across the country.
As well as lowering the price for energy customers Truss has also spoken out on new strategies going forward to ensure the UK is never in this situation again by future-proofing our energy supply whilst still achieving our Net Zero goals. This has included the end of the ban on fracking and scraping green levies on energy bills.
What does this mean for your business?
This is good news for your business, as this means for the next six months your energy supplier will only be able to charge you at the government’s capped prices for your energy bills. This plan has been put in place to help businesses in the immediate future, in hopes to reduce or stop any businesses from having to close their doors.
What is an energy price cap?
An energy price cap is a government price guarantee which limits the price that customers can be charged for the cost of their energy. This will provide businesses with equivalent support as is being provided to consumers.
When will the price cap be in place, and how long will it be in place?
The price cap will come into effect on 1st October. All businesses and other non-domestic properties such as schools, and charities will have the price cap for six months. There will be a review after three months to consider targeted support for those businesses most in need.
What will happen after the initial price cap period?
This is currently unknown, but the message being delivered from the government is that their actions to accelerate domestic energy supply such as fracking will ease the burden beyond the Winter period on wholesale energy costs.
If my business is in a fixed contract lower than the price cap, what happens?
You need not worry, your contract will continue and your bills will be paid at the agreed contracted rates.
I have recently agreed to a new energy contract, what happens if the new contract is more expensive than the price cap?
Whilst the exact mechanics are yet to be confirmed, come October all prices will be limited at the energy price cap which means that suppliers cannot bill for anything above the cap that is set by the government. Suppliers will be provided with the difference between the new lower price, and what the supplier would charge their customers.
Will the suppliers rebill my business if we have previously paid a higher rate than the price cap?
This is yet to be confirmed, but based on historic domestic price caps, it looks unfortunately unlikely.
What happens if I can’t pay my business energy bills?
If you are finding payment of your business energy bills, then you should contact your supplier as soon as possible. Under Ofgem rules, the supplier must offer a reasonably affordable payment plan.
What happens next?
The government along with UK energy suppliers are expected to announce a detailed plan next week for how this support will be rolled out, and cover details of how this will impact your business. We will be writing to all customers as and when we have further information on this point.
How does the energy price cap work?
The energy price cap works by setting a certain price for each unit or gas and electricity, which energy suppliers cannot charge you over. This has not yet been set for Businesses, however updates should be coming shortly. Read more about how the cap will work here.
How Resolve Energy is going to support your business
Although the price cap provides a temporary ceiling on what energy suppliers can charge your business, this price cap is only in place for six months, and this is not the time to sit back and forget about your energy bills.
Once the energy price cap is removed prices are likely going to rise again, however, this doesn’t mean your business should panic this gives a perfect opportunity for you to look at ways to reduce your energy consumption and secure the long-term energy outlook for your business.
Our suite of energy reduction services can help you with this. Over the next six months, our energy reduction and efficiency plans could ensure your business can mitigate potential market increases. By working with your business we can develop a pathway to ensure your business is in the best possible position going forward.
For more information on these services, or if you have any questions or concerns, please get in touch with your account manager or a member of our team on 08001707670
For more updates on the business energy price cap read more here.