Government’s announcement of a new “Energy Bills Discount Scheme” for UK businesses, charities, and the public sector has been welcomed by Mansfield’s MP.
The new energy scheme was confirmed yesterday (9th January), ahead of the current scheme ending in March. The new scheme will mean all eligible UK businesses and other non-domestic energy users will receive a discount on high energy bills until 31 March 2024.
This will help businesses locked into contracts signed before recent substantial falls in the wholesale price manage their costs and provide others with reassurance against the risk of prices rising again.
The government provided an unprecedented package of support for non-domestic users through this winter, worth £18 billion per the figures certified by the OBR at the Autumn Statement. This is equivalent to the cost of an increase of around three pence on people’s income tax.
The government has been clear that such levels of this support, unprecedented in its nature and huge scale, were time-limited and intended as a bridge to allow businesses to adapt. The latest data shows wholesale gas prices have now fallen to levels just before Putin’s invasion of Ukraine and have almost halved since the current scheme was announced.
The new scheme therefore strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion. This provides long term certainty for businesses and reflects how the scale of the challenge has changed since September last year.
From 1 April 2023 to 31 March 2024, eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill, except for those benefitting from lower energy prices.
A substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries. A long standing category associated with higher energy usage; these firms are often less able to pass through cost to their customers due to international competition. Businesses in scope will receive a gas and electricity bill discount based on a supported price which will be capped by a maximum unit discount of £40.0/MWh for gas and £89.1/MWh for electricity.
The Chancellor has also written to OFGEM, asking for an update in time for the Budget on the progress of their review into the non-domestic market. He has asked for their assessment of whether further action is action is needed to secure a well-functioning market for non-domestic customers following reports of challenges certain customers are facing, including in relation to the pricing and availability of tariffs, standing charges and renewal terms, and the ability of certain sectors to secure contracts.
Commenting on this Ben Bradley MP said:
“I’m pleased Government is doing everything it can to help businesses manage their costs until March 2024 by introducing this new scheme. Although wholesale energy prices are beginning to fall, the risk of price volatility remains high, so it is vital that businesses have the assurance that they can afford to keep on operating during this period.
“The Energy Bills Discount Scheme is welcome as it will provide businesses locked into contracts before recent price falls with a discount of up to £6.97/MWh to their gas bill, and up to £19.61/MWh for electricity bills – with more support available to energy-intensive trades.
“I’m also pleased that the Chancellor has written to Ofgem for an update on whether further action is needed to make sure the market is working for businesses. I’ll continue to do everything I can to ensure businesses across Mansfield and Warsop receive the support they need.”
