Just this morning the government outlined their new plans to support UK households, businesses and public sector organisations with the rising cost of their energy bills.
The plan was put in place to support growth, prevent unnecessary insolvencies and protect jobs by reducing price rises, putting in place price guarantees and working with energy companies to offer peace of mind and stability.
So, what exactly was announced?
What Government plans have been announced today?
- The government will work with suppliers to reduce wholesale energy costs and prevent the rises in bills that businesses have been facing
- Energy bills will be automatically reduced on bills for any business on fixed priced contracts agreed since 1 April 2022 or variable tariffs. For usage from 1 October 2022 to 31 March 2023
- This reduction includes the removal of green levies and brings Supported Wholesale Price – expected to be £211 per MWh for electricity and £75 per MWh for gas, to less than half the wholesale prices anticipated this winter & in line with households
- This is in addition to the Energy Price Guarantee for households, which should also offer some reassurance to business owners
The government also plans to announce more of their plans in 3 months, to showcase the support that will be in place after March 2023.
What this means for businesses:
The revealed new governmental plans means that businesses can gain a better and more stable understanding of their outgoings in the short-term for energy costs. However, businesses will have to plan for longer periods than just the 3 months ahead.
This means there may not be much impact or difference to rising costs of materials suppliers demand. This is because they themselves will be reluctant to pass on the cost savings before a longer-term plan has been revealed.
If a business has a higher energy usage, there are some things they can do to get prepared.
1. Focus on preparing financial forecasts
Continuing to prepare forecasts for worst and best case scenarios help businesses get a better picture of the months ahead. They’ll feel more confident and equipped to handle with different energy bill costs and be able to plan for different levels of working capital to ensure cashflow stays healthy. Or spot risks ahead of time to act quicker to get the funding or support they’ll need.
2. Look for longer-term cost savings using renewables or alternative energy sources
In our series of interviews for the Future Positive Podcast, we recently featured Paul Collins, Senior Manager at West Yorkshire Combined Authority and Leeds City Region LEP. Paul helps support small businesses in the region to adopt “Clean Tech” to help reduce their energy costs.
Paul explains some different ways that can make a difference for small businesses. Firstly, he talked about behavioural changes, such as those we discussed in this recent blog - including turning off appliances and educating staff. He then discusses how business can take more more significant interventions, such as investing in capital. This investment helps businesses use greener energy sources, focus on efficient cost-saving measures or assist in the reduce, reuse, recycle strategies of a circular economy.
Paul states “schemes offering free energy audits and 40% grants towards capital investment will end in 2023, so use them before you lose them”
“I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs and livelihoods.”
- Prime Minister, Liz Truss