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Six month energy bills cap for businesses

Published:  08 September, 2022

New Prime Minister Liz Truss has announced there will be a six-month scheme for businesses to tackle the soaring costs of energy bills.

In this morning’s speech in parliament, Truss announced support for households in the wake of skyrocketing energy costs, which will cap bills at £2,500 from October for two years.

Businesses will now receive the equivalent support, but for only six months, with a review to follow.

During the thirty-minute speech, further details around support for businesses were few and far between.

However, Truss made it clear that “the government will provide further support to vulnerable sectors such as hospitality, including our local pubs”, after the six-month time frame.

“The business secretary will work with business to review where they should be targeted to make sure those most in need get support. This review will be concluded within three months, giving businesses certainty. In the meantime companies with the wherewithal need to be looking for ways they can improve energy efficiency and increased direct energy duration,” she said.

Last month it was announced that the energy price cap would rise to an average annual £3,549 for households in October from the current £1,971.

Now, this will be superseded by the new price guarantee.

Under the new plan, businesses will see their energy costs capped at the same price per unit – or kilowatt hour (kWh) – that households will pay.

Under the new price guarantee, the government will pay energy suppliers the difference between the cap and what they would have charged without any intervention – a statement that was then challenged by Labour leader, Keir Starmer, on why Truss refuses to introduce a windfall tax on energy suppliers’ profits.

Truss is now looking to boost domestic energy supply by lifting the ban on fracking and use of shale gas.

The scheme for businesses is in sharp contrast to the help being offered for domestic customers, which will be in place for two years.

Though the cap will run for six months, there is hope it will be extended for “vulnerable sectors” such as hospitality, further down the road.

More on the impact to businesses amid spiralling energy costs, is available to read here.