Government help with energy bills

Article posted

14th Oct 2022

Read time

7-14 min read


Mollie Pinnington

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This week the government put out a new Energy price bill into law. The bill along with the energy price cap will further support households and businesses with energy prices.  

A big part of the Energy Price Bill is the Cost-Plus Revenue Limit. This will ensure consumers pay a fairer price for their electricity. The bill includes powers to stop volatile gas prices from dictating the cost of electricity that is produced from much cheaper renewables.

The temporary bill is still being determined but is planned to be in place by the beginning of 2023. The government have stated that this is going to protect consumers and taxpayers.    


The electricity generated from low-carbon sources such as solar, wind, or nuclear power will be essential for producing low-cost, homegrown energy. More renewables need to be generated to improve energy security in the UK. 

Electricity prices were originally tied to gas prices as gas-fired power stations were the main generation of electricity.  Gas-fired power stations are the most expensive form of electricity generation. However, a lot more of the electricity in the UK is produced by renewable generators which produces electricity much cheaper.  

The bill gives new powers to help sever the link between global gas prices and the cost of low-carbon electricity. This not only ensures people pay fair prices but also has the potential to save billions for billpayers in the UK.


What energy support is the government offering?


With the new energy price bill, the government will have the power to introduce the following support schemes.

Business Energy Price Cap

The business energy price cap is going to lower the amount all non-domestic customers pay for their energy bills. This support comes into effect in October 2022 and is set to last until March 2023. This support will either cap or discount the wholesale element of your energy prices, depending on your contract.

Your business will be eligible for this support if your energy contract was signed on or after the 1st of December 2021. For further information on this support, read more here.

Energy Price Guarantee

The energy price guarantee is a price cap for domestic customers. This will ensure that a typical household is paying no more than £2,500 a year on gas and electricity bills, for the next two years, depending on their usage. This support will also come into effect in October 2022.

Alternative Fuel Payment

Not all households are on the main gas grid and may use alternative fuels such as heating oils to heat their homes. Therefore these households are not as vulnerable to high market prices. However, they are still exposed to inflation like the rest of the country. Due to this, the government are going to give these households one payment of £100.

If you own a business that uses alternative fuels to heat the building, then there will be more details available shortly.

Heat Network Support

This bill will also ensure that heat networks benefiting from the business energy price cap will pass through cost savings to customers. there will be pass-through requirements these businesses are required to provide.

Pass through requirements

The energy price bill will ensure that energy support is received by the end user. For example, if your energy bills are through your landlord, they will be required to pass benefits through.


How will this support benefit my business?

The energy bill support will be a help to business energy customers. This will ensure that your business pays less for its energy bills over the harsh winter months. Also with the cost plus revenue limit, electricity could eventually become less expensive which will mean you pay less for your energy bills. The energy price bill will also ensure you actually receive support for your business. 


Is my business eligible for any government support?

Your business will be eligible for support for the price cap if you signed your energy contracts on or after the 1st of December 2021. The reason the government has set this date is that gas and electricity were a lot cheaper last year. The spike in energy prices this year has mainly been due to Russia slowing down exports after they invaded Ukraine. 

Read more here on what the energy price cap really means for your business


What is an energy price cap?

An energy price cap limits the amount suppliers can charge customers for a unit of energy. In England, Scotland and Wales domestic and non-domestic customers are both supported by this.

For domestic customers, this is the energy price guarantee which will cap electricity at 34p/kWh and gas at 10.30p/kWh. Depending on usage an average household should not pay over £2,500 for their annual energy bills.

The business energy price relief scheme is a price cap, however only on the wholesale element of your bills. According to Ofgem the wholesale cost of a bill is 29% of electricity bills and 41% of gas bills. This means that for business rates the price cap only relates to a certain proportion of your energy bills. See below for a breakdown of a business energy bill.


What will I pay for energy?

For businesses, this depends on what type of tariff you are on. If you are on a fixed rate tariff you will pay 21.p/kWh for electricity and 7.5p/kWh for gas on the wholesale element of your energy bill.

For example, let’s say your business pays 102p/kWh for electricity and the wholesale element of this price came to 57p/kWh. This would be discounted to the government baseline wholesale price, which is 21.1p/kWh. This means you would see a discount of 36p/kWh on your energy bills, meaning you would pay 66p/kWh for your electricity for the next six months.

However if you are on default, deemed or variable tariff the discount you receive will only be covered by a maximum discount of 34.5p/kWh for electricity and 9.1kWh for gas. For example, let’s say you are on out-of-contract rates and paying 130p/kWh for electricity. The maximum discount you can have on your bill is 34.5p/kWh, which leaves you paying 95.5p/kWh.


Should I switch to a fixed-rate tariff?

From the comparison of prices above it is clear to see you are likely going to be better of on a fixed-rate tariff. This will make sure you are receiving the best discount possible on your energy bills over the next six months.

The business energy relief scheme is not the only reason your business is best being on a fixed rate tariff. Unfortunately, after the government support is finished the cost of energy is not going to magically go down. This means if you do not have a fixed price to pay at the end of March next year you are going to be exposed to high energy prices and an extremely volatile energy market.

If you would like to speak to a consultant today to find out more about switching to a fixed-rate contract, then get in touch.


What happens to my energy bills after the scheme?

If your business is on a fixed rate tariff you will go back to paying your original fixed price that was agreed on your energy contracts before the price cap began.

If you are concerned that your business is going to be unable to cope with high energy prices again after the price cap then this could be the perfect time for you to lower your consumption.

Installing energy-efficient technology and practices into your business over the next six months could lead to much lower energy consumption, which will lead to you saving on your energy bills. 

If you are interested in lowering your energy bills then why not look at our Net Zero solutions today? 


How do I receive energy support? 

You do not need to do anything to receive government support, this will be automatically applied to your energy contract. Watch out for any phone calls or emails telling you to sign up to receive government support as they will most likely be energy scams. 

If you're looking to save money on your energy bills then why not get in touch today? The relationships Resolve Energy has developed with over 24 of the UK’s biggest business energy suppliers allows our energy experts to source the best business energy rates available for your company right when you need them. Request a free quote today and start saving money on your energy.

Looking to pay less on your energy bills?

Get a free quote today