Help for mounting energy bills confirmed for business
Businesses in the UK have been given a package of government support to help them get through the winter. The plan includes a cap on wholesale power prices, which will significantly reduce the amount that businesses have to pay for energy from 1 October.
The UK government yesterday announced a new scheme to help businesses with their energy bills this winter. Under the scheme, wholesale gas and electricity prices will be fixed for firms for six months from 1 October.
Industry groups have welcomed the announcement but have warned that further support may be needed after the winter. The government has said that it will review the scheme after three months, with an option to extend support for "vulnerable businesses". It is not yet clear which sectors will come under this category.
However, the announcement is a welcome relief for businesses across the UK who are struggling with high energy costs. With Supported Wholesale Prices (SWP) fixed at £211 per MWh for electricity and £75 per MWh for gas, businesses will be able to budget more effectively and protect themselves from the volatile wholesale market.
This is a substantial discount on current wholesale prices, and it will make a big difference to businesses' bottom lines. Of course, other charges such as standing charges will still be added by suppliers, but this fixed price will give hospitality businesses much-needed certainty as we approach the key Christmas trading period.
The scheme will apply to companies who have agreed fixed deals at higher prices on or after the 1st April 2022, as well as those on variable and flexible tariffs. There's no need to contact suppliers, as the discount will be applied to bills automatically. You'll start seeing savings from October, but the discount will be received from November. The support will apply to all non-domestic energy customers in England, Scotland and Wales, with a similar scheme being established in Northern Ireland.
Here at Beacon, we always want what's best for our clients. That's why when it comes to energy prices, we want to ensure you get the most relevant and up-to-date advice. Recently, we spoke to our supply partner and digital energy services company, eEnergy, about what our customers should do following this announcement of government support.
They recommend that any customers who are yet to enter fixed price contracts do so from 1st October 2022 to 31st March 2023, subject to supplier product availability. For those wishing to fix prices further, they recommend entering into a separate supply agreement from 1st April 2023. However, please engage with the eEnergy’s client team who will help you secure the best deal, as suppliers will still include their own premiums and margins, in addition to the SWP and non-commodity costs. In short, they don't recommend out-of-contract or deemed rates so getting into a contract is paramount.
eEnergy’s basket products are a more dynamic way to manage risk going forward for those customers who have typically fixed prices. For any businesses currently in a flexible supply agreement, they recommend fixing out the remaining exposure for the winter period. The introduction of a maximum discount discourages those businesses to take a day ahead approach as there is always a risk of day ahead prices being more than the SWP plus maximum discount. Their Trading Desk will reach out to all flexible clients to assess appetite for risk over this period to agree an appropriate strategy.
So, if you've been struggling to manage soaring bills, some much needed help is finally on the way. However, the situation remains unpredictable, particularly after March. For further information on the advice above, please contact eEnergy directly by clicking here. Alternatively, drop Beacon a message via Live Chat or the button below and and we’ll put you in touch.