Business energy bills could be cut by a third under government plan

Les petites annoncesBusiness energy bills could be cut by a third under government plan
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Business energy bills could be cut by a third under government plan

Businesses could have their energy bills cut by a third under government support to be announced later.

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Business Secretary Jacob Rees-Mogg is expected to reveal a cap on wholesale energy costs for business customers.

It is thought the limit will be 21.1p per kWh for electricity and 7.5p per KWh for gas – a discount of a quarter to a third on current market prices.

It means businesses facing an energy bill of £40,000 could see a reduction of £10,000 depending on usage patterns.

It is understood the changes will apply to contracts from 1 October and fixed contracts taken out since April, although show on bills from next month.

The government is likely to pass new laws to force the price cut to be passed on. Current market prices are about 28p per unit of electricity and 11p for gas.

Prime Minister Liz Truss has previously said support for business would be limited to six months.

There will be an option to extend it for « vulnerable businesses », however details of which sectors this applies to are not known.

Mr Rees-Mogg is expected to confirm details of a scheme to help firms, after the government announced a multi-billion pound support package to limit bills for households.

Typical household energy bills have been limited to £2,500 annually until 2024.

Both businesses and households have been hit by soaring electricity and gas bills due to the rising cost of global wholesale gas, largely caused by Russia’s invasion of Ukraine.

But unlike households, businesses are not covered by an energy price cap, which is the maximum amount a supplier can charge per unit of energy, measured in kilowatt hours (KWh).

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