What Government help with energy bills is available for your business this winter?

Businesses welcomed the relief package which will see the Government pick up nearly half of their soaring energy bills to ensure they do not go bust, Credit: PA

A huge raft of support for businesses - including hospitals, schools, manufactures, pubs and restaurants - has been unveiled by the government to reduce the burden of soaring energy bills on firms.

The new Energy Bill Relief Scheme has been described as a "lifeline" for businesses facing a desperate winter amid unprecedented rises in energy costs.

But how will the support package help businesses this winter and how much will their energy bills now cost?

Businesses will get support for six months. Credit: ITV News

When will bills be capped from?

Wholesale energy costs will be capped at "less than half" for all non-domestic customers under the scheme, in a bid to protect them from soaring prices so they are "able to get through the winter".

The initial scheme will apply from October 1 and will continue until end of March 2023.

The cap will be renewed after six months when the most vulnerable businesses like pubs, like shops, will continue to be supported, the prime minister, Liz Truss said.

The government said it would decide how to continue supporting the most vulnerable businesses once the current scheme ends next year.

How much will businesses bills be under the scheme?The government scheme essentially cuts firms' bills in half. The wholesale cost of gas and electricity will be slashed for companies under the scheme, with the government picking up half the costs, capping the wholesale price paid by non-domestic customers, which include schools and charities.

The support will work differently depending on what kind of energy tariff an organisation is on.

The “supported wholesale price” is expected to be £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas.

This is around half the expected wholesale price on the open market, and equivalent to the cap on household energy bills that will be set this October and run for two years.

Who is eligible for the support?

The scheme covers businesses and other non-domestic customers connected to the gas or electricity grid, including:

  • businesses

  • voluntary sector organisations, such as charities

  • public sector organisations such as schools, hospitals and care homes

who are:

  • on existing fixed price contracts that were agreed on or after 1 April 2022

  • signing new fixed price contracts

  • on deemed / out of contract or variable tariffs

  • on flexible purchase or similar contracts

Schools will be covered under the relief scheme. Credit: PA

Are there any exceptions?

As many as 1.2 million homes, and many businesses, rely on domestic heating oil. The government has promised £100 to those households who are not benefitting from the price cap, including those on domestic oil heating, but there has been no details yet for comparable help for businesses who use heating oil as their primary source of heat.

Prices for oil are at an all time high and the market is volatile, but as yet, businesses who use domestic heating oil will get some kind of equivalent support, although details will be announced later.

Also exempt are businesses that use gas or electricity for the purpose of generating power they are selling back into the grid, such as power stations, pumped hydro or grid-level battery storage.

Does it make a difference whether businesses are on a fixed-price contract or variable rate?

Organisations which signed fixed-price energy deals on or before April 1 this year will see the wholesale part of their bill capped automatically. Those who entered new fixed-price contracts after October 1 will get the same support.

Companies on default, deemed or variable tariffs will be given a per-unit discount, but the amount of support they can get is limited.

This means that if the price on wholesale gas and electricity markets keeps soaring, their bills will go beyond those on fixed-price deals.

The government said it is working with suppliers to ensure they offer businesses the opportunity to switch to a fixed contract.

New Chancellor Kwarsi Kwarteng has said more borrowing will be necessary to deal with the energy crisis. Credit: PA

How much will it cost the government and how will it be funded?

The government has not given any details on how the scheme will be paid for.

What do businesses say?

The scheme was largely welcomed by businesses.

Kate Nicholls, chief executive of trade body UKHospitality, said: “This intervention is unprecedented and it is extremely welcome that government has listened to hospitality businesses facing an uncertain winter.

“We particularly welcome its inclusiveness – from the smallest companies to the largest, all of which combine to provide a huge number of jobs which are now much more secure.”

Emma McClarkin, chief executive of the British Beer and Pub Association, said the energy support “will be a lifeline for many pubs and brewers this winter”.

Will there be further support after six months?

Under the plans, revealed by the Department for Businesses, Energy and Industry, the initial scheme will be replaced after six months with a targeted system focused on the most vulnerable industries like retail and hospitality.

Liz Truss confirmed to ITV News on Tuesday that the longer-term financial support will apply to vulnerable businesses "like pubs", who are less likely to be able to invest in their own energy supply.