Does The Energy Price Cap Apply To Businesses?

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    Guide Author

    James Longley

    Managing Director

    min read
    Last Updated November 30, 2023

    Is There a Business Energy Price Cap?

    The energy crisis has hit businesses in the UK hard, causing operational costs to soar and having a devastating impact on financial security. It’s an issue that’s left many SME owners questioning whether the energy price cap Ofgem has in place to protect domestic consumers applies to business energy customers.

    Unfortunately, there is no such safety net for businesses – there is no business energy price cap.

    At the height of the energy crisis, the government introduced the Energy Bill Relief Scheme (EBRS) to provide business owners with some financial support with their energy bills. This was introduced on 1 October 2022 and ran for six months – ending on 31 March 2023.

    The EBRS has since been replaced by the Energy Bills Discount Scheme (EBDS) , which came into effect on 1 April 2023 and will conclude on 1 April 2024. However, neither of these schemes offer or offered a cap on business energy prices.

    What was the Energy Bill Relief Scheme (EBRS)?

    The Energy Bill Relief Scheme (EBRS) is now closed. The Energy Bills Discount Scheme (EBDS) has replaced it. The EBRS provided businesses financial support with their gas and electricity bills for six months – from 1 October 2022 to 31 March 2023.

    Rather than capping the amount energy suppliers could charge customers, it limited the wholesale price suppliers paid to energy generators for the energy. The subsequent savings made by suppliers were passed on to business energy customers – resulting in them paying a lower unit rate.

    It was applicable only on business energy contracts signed after 1 December 2021. Businesses on flexible, out-of-contract or deemed rates were also eligible for the scheme.

    The prices for each utility were set to:

    • £211 per megawatt-hour (MWh) for electricity
    • £75 per MWh for gas

    If your company was on a fixed-rate contract, the discount was the difference between the rates you agreed to when signing the contract and the baseline prices mentioned above.

    If you were on any other eligible contract types, your discount was the difference between the wholesale rate charged by your supplier and the baseline prices.

    Energy suppliers automatically applied all reductions to business energy bills – in pence per kilowatt-hour (kWh). Green levies were also removed from rates, but VAT remained unchanged during this period.

    What is the Energy Bills Discount Scheme (EBDS)?

    The Energy Bills Discount Scheme (EBDS) came into effect on 1 April 2023. It’s due to run until 31 March 2024. It’s a scaled-back version of the Energy Bill Relief Scheme (EBRS) designed to offer some financial support to businesses with their gas and electricity bills, in the form of discounts on unit prices.

    It’s important to note that the scheme is not and does not function as a business energy price cap. The more energy you use, the higher your bill will be.

    The discount is only triggered when wholesale unit prices rise beyond the threshold set by the government. They’re set at:

    • A discount of up to £19.61 per megawatt-hour (MWh) on electricity when wholesale prices are above £302 per MWh.
    • A discount of up to £6.97 per MWh on gas when wholesale prices are above £107 per MWh.

    If the wholesale prices don’t rise above the set threshold, the discount will not be applied.

    You can find out more by visiting our dedicated ‘Energy Bill Discount Scheme’ page.

    If you’re still looking for a better deal, Utility Bidder can help compare business energy prices to find the right solution for your business. We’ve helped 75,000 businesses find a better deal on their utilities. Could you be next? For a personalised quote, contact us and one of our friendly experts will be in touch.

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    Please enter your business gas information
    How much do you spend & how often?

    An estimate is fine if you don't have a bill to hand

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    Let’s save time, can we automatically gather meter information?

    ? What does this mean?
    To get your quotes at lightening speed we need several key pieces of information which can all be found on your electricity bill. But by simply ticking this box, we can search ‘industry held data’ to get your meter number, electricity consumption and current energy supplier. This means that we can get you quick quotes without asking you to dig out all of your paperwork. This is personal data therefore we need you to allow us to access this information.
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