The UK government has introduced new emergency powers that will ensure businesses across the country receive help with their energy bills this winter.
Without the launch of the schemes, businesses and consumers had been left facing increasing financial turmoil, with energy bills estimated to increase to as high as £6,500 before the government stepped in. Recently announced support will see a typical household pay £2,500 a year for energy, while businesses will be paying less than half of predicted wholesale costs this winter.
The Energy Prices Bill, introduced in Parliament on Wednesday (12 October 2022), provides the legislative footing needed to ensure that people and businesses across the UK receive support with their energy bills this winter through the Energy Price Guarantee for domestic consumers and Energy Bill Relief Scheme for businesses and non-domestic properties. This includes essential measures that enable the UK government to deliver comparable schemes in Northern Ireland and legislation that will require landlords and heat network operators to pass benefits through to tenants.
The precise mechanics of the temporary Cost-Plus Revenue Limit will be subject to a consultation to be launched shortly. The government says it has been working closely with industry on the detail of the proposal, ahead of it coming into force from the start of 2023. It will ensure consumers pay a fair price for low carbon energy and has the potential to save billions of pounds for British billpayers, while allowing generators to cover their costs, plus receive an appropriate revenue.
Business and Energy Secretary, Jacob Rees-Mogg, said:
Businesses and consumers across the UK should pay a fair price for energy. With prices spiralling as a result of Putin’s abhorrent invasion of Ukraine, the government is taking swift and decisive action.
We have been working with low-carbon generators to find a solution that will ensure consumers are not paying significantly more for electricity generated from renewables and nuclear.
That is why we have stepped in today with exceptional powers that will not only ensure vital support reaches households and businesses this winter but will transform the United Kingdom into a nation that offers secure, affordable and fairly-priced home-grown energy for all.
Chancellor of the Exchequer, Kwasi Kwarteng, said:
Our actions will mean that energy bills for the typical household will be half what they would have been this winter.
We are protecting people, holding down inflation and preventing Putin’s energy price hike from causing long term harm to our economy by supporting businesses.
The Energy Prices Bill forms yet another decisive step taken by the UK government to reform the energy market, giving Britain back control of its own home-grown energy and breaking ties to the ever-increasing volatility and uncertainty of the global gas market.
UKHospitality Chief Executive Kate Nicholls said:
“The government’s intervention to support hospitality businesses facing soaring energy costs this winter is extremely welcome and it’s fantastic to see this legislation introduced. The measures in this Bill will provide relief to all manner of hospitality businesses, from the smallest companies to the largest.
“The introduction of these measures follows months of campaigning by UKHospitality to ensure the government recognised the huge impact rising energy costs will have on our sector.
“I’m pleased that the government has continued to listen to the sector to ensure its relief package is inclusive for all. Its decision to expand the scheme to include operators on fixed price contracts agreed from 1 December 2021 has avoided unfairly penalising businesses who had acted early to protect themselves from further price hikes. The publication of wholesale energy prices will also provide much-needed clarity for businesses.
“Unfortunately, the reality of this crisis means that, even with this support, energy bills will still be much higher than last year and many hospitality businesses will struggle to make it through to next spring. What the sector really needs now is the introduction of longer-term measures that can allow us to boost economic growth, namely a lower rate of VAT and further business rates relief.”