The government has announced that wholesale energy prices for businesses will be capped for six months from 1 October, as part of the The Energy Bill Relief Scheme in England, Scotland and Wales. The new announcement follows the £150bn package to help households with the cost of energy bills, unveiled on 8 September.
The details released so far on the measures state that wholesale prices will be fixed for all non-domestic energy customers at £211 per MWh for electricity ( 21.1p/kwh) and £75 per MWh for gas (7.5p/kwh) for six months. The CLA currently understands that the initiative will be reviewed after three months with an option to extend support for "vulnerable businesses". Details on what the criteria for this category include are yet to be announced.
A cap on the unit rate makes good sense, but the Government must act to stop the significant and largely unjustified increase in standing charges
Commenting on the latest measures announced by the government, CLA President Mark Tufnell said: “The news that the Energy Bill Relief Scheme will fix gas and electricity prices for all businesses across the country for six months from 1st October is welcomed to an extent.
Mark continued: “A six-month cap is too short a time span for most businesses. They need certainty of their cost base if confidence is to return in the medium term. It is vitally important that the Government puts in place measures that will avoid a cliff edge in profitability that will simply perpetuate the difficulties that many businesses face today when the cap comes to an end."
In closing, Mark urges the government to shed more light on the measures by saying: “A cap on the unit rate makes good sense, but the Government must act to stop the significant and largely unjustified increase in standing charges. Further details of the scheme and how it applies to businesses are needed as soon as possible.”