The Government’s energy support for firms will end in April 2023, and is set to be replaced with a less generous package.
The current price cap and support payment structure is costing the treasury £18 billion, which they have admitted is too costly.
The new Energy Bills Discount Scheme will be set at £5.5 billion, a huge decrease in what has been available for struggling businesses.
The new rates will run from April 1st 2023 to March 31st 2024. This means, for customers contracted with a licensed energy supplier:
- A unit discount of up to £6.97/Mwh for gas
- and £19.61/MWh for electricity.
And, for energy and trade intensive industries
- A price threshold of £99/MWh for gas
- and £165/MWh for electricity
Trade intensive discounts will only apply to 70% of energy, and will be subject to a ‘maximum discount’ of:
- £40/MWh for gas
- £89.1/MWh for electricity
This will hopefully absorb some of the costs that will be passed onto customers.
Once the current support ends, it’s expected that energy prices will jump, putting many small businesses at risk. However, there is a hint of hope on the horizon.
Chancellor @Jeremy_Hunt has announced a new 12 month energy scheme for businesses, charities & the public sector.
The scheme:
✅ Provides continued energy bill support to businesses
✅ Supports energy intensive industries
✅ Limits taxpayer exposure to global energy markets
— HM Treasury (@hmtreasury) January 9, 2023
Business rates will receive a support package of £13.6 billion over the next five years, and see a £2.4 billion cut in fuel duty.
Fuel prices are also beginning to drop, as are energy wholesale prices. This week, petrol has dipped below £1.50 a litre saving motorists some much needed cash.
However, diesel prices are still high, compared to this time last year, at around 172.21p a litre.
A warmer winter has forced energy suppliers to lower wholesale prices, but this decrease has not yet filtered through to businesses and domestic users.
The crisis that set in during the closing months of 2022, resulted in energy companies stocking up on gas to meet demand. And it’s this stock, purchased at a higher price, that is delaying a reduction in consumer prices.
It’s expected that energy prices will be lower than predicted this year. However, will this be enough to save small firms on the brink?
Tradesman Talk
How will the change in the level of support offered, impact your trade?
What are your energy and fuel cost predictions for 2023? Will this be the year we see some normality return?
As always, leave your comments below and click the social links to share this news.
Until next time, make sure it’s Tradesman Saver.
