Business energy bills to be capped during winter months

Business energy bills are to be discounted for six months, the government confirmed on Wednesday, in response to surging wholesale energy prices.

Under the Government Energy Bill Relief Scheme, electricity and gas bills for all non-domestic customers - including charities and public sector organisations - will be automatically discounted, in line with support already announced for households.

The scheme will apply to fixed contracts agreed on or after 1 April 2022, as well as variable and flexible tariffs, and cover energy used between 1 October 2022 and 31 March 2023.

Prices are expected to be fixed at £211 per MWh for electricity and £75 per MWh for gas during the six-month period, "less than half the wholesale prices anticipated this winter", the Department of Business, Energy and Industrial Strategy said.

An overall cost for the subsidy has not been announced, as it will depend on what happens to wholesale market prices during winter, the department added.

Liz Truss, prime minister, said in a statement: "I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we’re taking immediate action to support them over winter."

Matthew Fell, chief policy director at the Confederation of British Industry, said: "The package will ease worries about otherwise viable businesses shutting up shop, and small companies especially will benefit from the discounted rate.

"Businesses will also want to know more about the exit strategy and what happens when the six month cap runs out."

UK Steel, the industry body, also welcomed the move, with the electricity cap giving foundation sectors such as steel "the chance to get through winter by giving us a competitive business landscape".

The government announced earlier this month plans to cap household energy bills at £2,500 from 1 October.