Everyone has heard of the UK energy crisis. No matter how you get your electricity or gas to your home or business, whether it is by renewable energy or by fossil fuels, the bottom line is consumers have never been so concerned about rising bills.
If you are an entrepreneur, you would want to know more about the implications of the UK energy crisis on your business. Read more below and visit business energy comparison sites to find out where to find the right source of energy for your business.
There are a lot of factors, such as the 2020/21 cold snap in Europe, rising global demand and supply issues from Russia related to the conflict with Ukraine, and lack of access to sources of natural gas in some regions. As such, gas prices have risen dramatically over the past few years.
To make things worse, energy prices will rise substantially in the next few years.
As of 2023, the projected domestic energy bills for a typical household is over £5,000 per year, increasing from the 2018 average of £3,500.
Aside from households, businesses are similarly affected by the UK energy crisis, and unfortunately, they are paying much more for their energy bills.
With this current situation, one main concern for businesses is that they have less energy protection than domestic consumers.
While the Office of Gas and Electricity Markets (Ofgem) already rolled out an energy price cap to help households cope with the rising prices, this scheme does not apply to businesses in the United Kingdom, regardless of size.
In addition, there is usually no price cap for domestic and non-domestic customers in Northern Ireland.
But, there is one good thing businesses can take advantage of because contracts for commercial energy are typically longer than those for residential energy and can last up to five years.
As a result, some businesses with existing contracts are safe from rising prices for the time being.
You might wonder if the government is doing anything to help domestic and non-domestic customers combat the energy crisis.
The UK government has already implemented three schemes to cope with the rising energy prices. Let’s look at the details of each one below.
The government announced what assistance businesses and non-domestic customers in the United Kingdom would receive under the Energy Bill Relief Scheme on September 21, 2022.
A Supported Wholesale Price was implemented on October 1, 2022, and will be in effect until March 31, 2023. This is a price ceiling on the most a company will pay for a megawatt-hour (MWh) of electricity or gas.
The Supported Wholesale Price for electricity in the United Kingdom is £211 per MWh and £75 per MWh for gas. Northern Ireland established a parallel scheme that used the same supported prices.
In the United Kingdom, your discount will be applied automatically if you have a fixed-rate contract signed on or after April 1, 2022.
This includes contracts signed after October 1, 2022. The discount will apply in Northern Ireland to fixed-rate agreements signed on or after December 1, 2021.
If you have a deemed, default, or variable contract, your maximum per-unit discount will be £345 per MWh for electricity and £91 per MWh for gas.
Your supplier will compare the six-month average expected wholesale price to the Supported Wholesale Price. While your supplier will reduce overall costs, the terms of your contract mean that your bills may change over time and be subject to additional price increases.
Suppose you are a larger company with a flexible purchase contract. In that case, your supplier will calculate your price reduction based on the terms of your agreement, but it will be subject to the maximum discount as set forth above.
The Energy Bill Relief Scheme will be reviewed three months after its launch to determine which industries are most vulnerable and what assistance, if any, will be provided after March 31, 2023.
The Energy Price Guarantee is a scheme for domestic customers similar to the Energy Bill Relief Scheme (EPG).
In the United Kingdom, this began on October 1, 2022, and will last until March 31, 2023, rather than the two years initially announced by the government.
It will run from November 1, 2022, to March 31, 2023, in Northern Ireland, with a further reduction applied to compensate for the scheme not starting in October.
The EPG automatically caps domestic customers’ unit rates and standing charges for electricity and gas. Your rate cap will determine where you live and how you pay for your energy.
Meanwhile, your usage will determine how much money you save overall.
These measures keep the average dual fuel energy quote under £2,500 per year.
Domestic customers will benefit from the Energy Bill Support Scheme and the Energy Price Guarantee (EBSS).
In the United Kingdom, this entitles households to a £400 non-repayable discount on their energy bills spread over six months.
Domestic customers will receive a £66 bill discount in October and November and a £67 bill discount in December, January, February, and March.
The Energy Bill Support Scheme will be distributed in Northern Ireland as a single £400 lump sum payment.
The energy crisis gripping much of the UK is worth paying attention to.
It would help if you kept your eye on the situation because it will impact your company’s bottom line.
You should have a plan to combat the costs of the UK energy crisis. You can start by making sure that you are billed correctly. You can also look for creative solutions to reduce energy consumption and increase your business’s energy efficiency.
For instance, you can switch from traditional lamps to LEDs since the average lightbulb wastes 95% of its energy as heat.
You can also check if you have a business energy claim or are eligible for business energy grants.
You may also switch your current business energy supplier to get the best rate.