The UK government has confirmed plans to provide relief to businesses in the form of the Energy Bill Relief Scheme, which will come into effect on 1 October.
The scheme will run for six months until 31 March 2023, with a review at the halfway stage to inform decisions on the next steps from April 2023 onwards.
Businesses on fixed price energy contracts agreed on or after 1 April 2022 will have their per unit energy costs automatically reduced by the relevant p/kWh.
Those on default, deemed or variable tariffs will receive a per unit discount on energy costs, the government said, up to a maximum of the difference between the government support price and the average expected wholesale price over the period.
As a result, the maximum discount is likely to be around £405/MWh for electricity and £115/MHw for gas, based on wholesale price changes.
Therefore, while they will pay reduced bills, the amount they pay will vary depending on any wholesale price changes.
Energy market researcher Cornwall Insight predicts, on average, businesses will receive a discount of close to 45% based on last week’s closing wholesale energy prices.
Those businesses that use the most energy, usually on flexible purchase contracts, will have their discount calculated by suppliers based on their contract but will remain subject to the maximum discount.
“As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind,” said Prime Minister Liz Truss.
“At the same time, we are boosting Britain’s homegrown energy supply so we fix the root cause of the issues we are facing and ensure greater energy security for us all.”
However, the feeling among some businesses and industry experts is mixed.
Government high streets task force expert and ShopAppy founder, Dr Jackie Mulligan said, "This announcement has come too late for many small businesses, and the length of time they may need to wait for payments to be backdated will exacerbate the already critical cashflow issues they are facing.”
There is also a feeling that the support only tackles one of the mounting pile of issues that businesses are currently facing.
“Energy costs have been the main thing keeping business owners up at night, but not the only thing,” said Danni Hewson, a financial analyst at AJ Bell.
“Staffing costs have risen, sales have been squeezed and whilst March might seem like a long way away as those cold British nights draw in, six months is nothing.”
“The government has promised there will be further, targeted intervention for some sectors, but there’s still so much uncertainty and business doesn’t like uncertainty.”
However, some have welcomed the help, with Shirley Leader, director of Petersfield-based woman's clothing boutique Velvet & Rose saying, "The help with energy bills is very much welcome.”
“We did originally hear that this would be for vulnerable businesses so are hoping it will cover all businesses.”