Energy price cap for businesses
Until the end of December 2023, all households are protected by the energy price cap limiting the duel-fuel bill of the average home to £1,923 per year.
Small business owners often ask what’s the equivalent protection available to companies. Unfortunately, there is no commercial equivalent to the energy price cap.
Instead, the Energy Bill Discount Scheme offers some support for companies until April 2024.
This article explores everything businesses need to know about the current government support scheme for business energy.
Is there a business energy price cap?
There is no business energy price cap. In normal circumstances, the British government doesn’t offer any price cap support to commercial customers.
But the last year has been far from normal in the world of business energy, and in response, the government is currently offering time-limited support through the Energy Bill Discount Scheme.
The Energy Bill Discount Scheme automatically discounts the most expensive business energy tariffs until 31 March 2024. Unlike a business energy price cap, the scheme offers a maximum discount of only 1.9p/kWh on electricity and 0.7p/kWh on gas.
Does the energy price cap apply to businesses?
No, the energy price cap is a government scheme that protects domestic energy users only. The price cap limits how much home energy suppliers can charge their customers in their standard variable tariffs.
The market for commercial energy works differently and isn’t protected by the business energy price cap. Business energy suppliers can freely set their out-of-contract rates, meaning these tariffs are expensive.
If there is no price cap, what help is there?
Without a business energy price cap, support for businesses is limited.
Companies paying the most expensive fixed energy tariffs entered into at the height of the 2022 energy crisis will receive an automatic discount from the Energy Bill Discount Scheme. Still, even the maximum discount of the scheme is only a few pence per kWh.
To avoid unfavourable business electricity prices and business gas prices, companies need to compare the market for the cheapest tariffs. That’s where AquaSwitch can help with our business energy comparison service.
Who sets the business energy price cap?
The regulator Ofgem determines the home energy price cap, but this does not apply to businesses.
Instead, companies are currently partially protected by the Energy Bill Discount Scheme, which was set directly by the central government in their announcement in January 2023.