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Government Plans for Cutting Business Energy Bills

We welcomed the news this week about the government price capping the ‘commodity costs’ in business energy bills from 1 October to 31 March 2023. The move effectively puts a maximum price on the unit price cost of electricity and gas charged to businesses.

Fixed-rate contracts

Businesses on existing fixed price contracts agreed on or after 1st April will be eligible for support. Electricity will be capped at £211 per MWh and £75 per MWh for gas for the duration of the scheme.

Customers entering new fixed price contracts after 1st October 2022 will receive support on the same basis.

Variable & deemed contracts

Businesses on variable or deemed out-of-contract rates will come under a maximum discount band. This is likely to be capped at around £405 per MWh for electricity and £115 per MWh for gas which means your business is likely to pay significantly more on a variable rate than in a contract.

We highly recommend locking into a contract as soon as possible to avoid unnecessary costs.

Flexible contracts

Businesses on flexible contracts will be covered by the price cap of £211 per MWh for electricity and £75 per MWh for gas but the maximum discount would apply if the market was to increase above £616 per MWh for electricity and £190 per MWh for gas.

In this instance, the customer would have to pay the difference between the market rate and £616/£190 per MWh as the maximum discount is subject to market movement.

What do you need to do?

Businesses eligible for support do not need to do anything as suppliers will automatically apply any subsidised rates to bills from November backdated to 1st October 2022 if applicable.

Contracts agreed before the 1st of April 2022 or with a start date on or after the 1st of April 2023 aren’t currently supported by the scheme. This may change when it is reviewed after three months and will also consider if further support for some business segments is required.

If your current contract ends in the next 12 months or you are on a flexible contract or variable/deemed rate speak to one of our team as soon as possible to ensure you receive the maximum benefit available to your business.

For more information visit the government website here.

Get in touch

For any more energy advice contact our team.


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