1 / 3
News Flash
    1/3LCCI welcomes the UK’s ratification of the CPTPPLCCI welcomes the UK’s ratification of the CPTPPRead more
    2/3New Report Reveals Economic Disparities Across LondonNew Report Reveals Economic Disparities Across LondonRead more
    3/3LCCI welcomes Migration Advisory Committee (MAC) reportLCCI welcomes Migration Advisory Committee (MAC) reportRead more
London Chamber of Commerce and IndustryLondon Chamber of Commerce and Industry
Contact Us

What does the Government’s policy on energy prices mean for your business?

More businesses will now be able to benefit from the Energy Bill Relief Scheme following changes to the eligibility criteria. Previously, businesses who had entered into energy contracts before April 2022 were not eligible for the Relief Scheme. Following the changes, this cut-off date has been moved to 1 December 2021.

London Chamber of Commerce and Industry is here to support you during these difficult times. We have called on Government to take action on energy prices. We know many members are extremely concerned about energy prices, rising costs on goods and services and liquidity constraints. We have prepared some advice to help your business cope with energy costs.

Government’s Business support scheme

  • 6 month support scheme for businesses & other non-domestic energy users
  • After initial 6 months government will provide focused support for vulnerable industries.
  • Review in 3 months’ time to consider where this should be targeted Wider energy policy

The scheme will be available to everyone on a non-domestic contract including:

  • businesses
  • voluntary sector organisations, such as charities
  • public sector organisations such as schools, hospitals and care homes who are on existing fixed price contracts that were agreed on or after 1 April 2022 or signing new fixed price contracts or on deemed / out of contract or variable tariffs or on flexible purchase or similar contracts.

Off grid

If you are not connected to either the gas or electricity grid, equivalent support will also be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas. The Government plans to announce further details in this area.

Amount that bills will be reduced

The estimated wholesale portion of the unit price will be compared to a baseline ‘government supported price’ lower than currently expected wholesale prices this winter.

For all non-domestic energy users in B this government supported price has been set at:

  • £211 per megawatt hour (MWh) for electricity
  • £75 per MWh for gas

For comparison, wholesale costs in England, Scotland and Wales for this winter are currently expected to be around:

  • £600 per MWh for electricity
  • £180 per MWh for gas

The support will be automatically applied to all eligible bills. You do not need to take action or apply to the scheme.

  • The savings for energy used in October will be seen in your October bills, which would usually be received in November.

If you agreed your fixed price contract / tariff on or after 1 April 2022 you will get support if the calculated wholesale element of the price you are paying is above the government supported price.

If your fixed tariff is based on wholesale prices below the government supported price, then you will not be eligible for support.

Your per unit energy costs will automatically be reduced by the relevant pence per Kilowatt Hour (p/kWh) for the duration of the scheme.

How will firms get the reduction

If you’re about to sign a new fixed price contract, the relevant price reduction will be automatically applied to your bill by your supplier.

If you are on a variable tariff, and want to remain on it, you will get the reduction, subject to the ‘maximum discount’. It is likely to be around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market but this is yet to be confirmed.

If wholesale prices rise above the combined government supported price and maximum discount then your prices will increase.

If you’re on a flexible purchase contract your price reduction will depend on the difference between your monthly weighted average baseload price (determined by your individual hedging approach) and the government supported price. In this case the maximum support available per unit of energy will also be limited by the maximum discount.

If you signed your fixed contract before 1 April 2022 you would not have been exposed to the recent rises in wholesale prices, so you will not be eligible for support under the scheme.

If you are out of contract you should set up your contract as normal. Your supplier will automatically apply appropriate reductions to your energy price for the duration of the scheme.

If you get your energy through a landlord / heat network / energy service company, it is expected that businesses and other organisations should pass on the benefits under this scheme through to the end user in a reasonable and proportionate way. This will ensure support, for instance, to customers of heat networks and park home residents.