The support package businesses and public sector organisations unveiled by Business Secretary Jacob Rees-Mogg is designed to protect firms from insolvency and protect jobs.
The Government is working with suppliers to reduce wholesale energy costs for businesses.
The scheme will need to be underpinned by emergency legislation, set to be introduced 'at the earliest opportunity' when Parliament is back from recess in October.
The precise timeline is yet to be confirmed.
We look at the key points:
Who is eligible?
The new Government Energy Bill Relief Scheme will provide a discount on wholesale gas and electricity prices for all non-domestic customers - this includes all 海角视频 businesses, the voluntary sector like charities and the public sector such as schools and hospitals.
This support will be equivalent to the Energy Price Guarantee put in place for households.
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How does it work?
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It will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. The level of price reduction for each business will vary depending on their contract type and circumstances - .
It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period. The savings will be first seen in October bills, which are typically received in November.
Business customers do not need to take action or apply to the scheme. Support (in the form of a p/kWh discount) will automatically be applied to bills.
How much is the reduction?
The Government has set a Supported Wholesale Price – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter – which is a discounted price per unit of gas and electricity.
Those on default, deemed or variable tariffs will receive a per-unit discount on energy costs, up to a maximum discount of around £405/MWh for electricity and £115/MWh for gas.
This is equivalent to the wholesale element of the Energy Price Guarantee for households.
It includes the removal of green levies paid by non-domestic customers who receive support under the scheme.
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A parallel scheme, based on the same criteria and offering comparable support, but recognising the different market fundamentals, will be established in Northern Ireland.
What about users of alternative fuel?
If you are not connected to either the gas or electricity grid, equivalent support will also be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas. Further detail on this will be announced shortly.
What happens after six months?
The Government said it will hold a review in three months looking at support after March 2023.
The review will focus in particular on identifying the most vulnerable non-domestic customers and how the Government will continue assisting them with energy costs.
How have businesses reacted?
Businesses have broadly welcomed the intervention but want to ensure support is available for the most vulnerable firms after six months and that long-term issues around energy security, including green energy production are addressed.
Kate Nicholls, CEO of 海角视频Hospitality welcomed the 'unprecedented intervention.'
"We particularly welcome its inclusiveness – from the smallest companies to the largest - all of which combine to provide a huge number of jobs, which are now much more secure.
"The Government has recognised the vulnerability of hospitality as a sector, and we will continue to work with the Government, to ensure that there is no cliff edge when these measures fall away."
Martin McTague, National Chair of the Federation of Small Businesses, said: "Ministers have listened to our community and got this big call right. Now it’s up to energy retailers to live up to the high bar set today and make sure this help reaches those on the ground."
Jonathan Geldart, Director General of the Institute of Directors, said it will work with the government in the coming months to ensure that further relief is targeted at those industries and sectors whose survival is most threatened by current economic conditions.
He said: "Ultimately, however, business and government will need to work hand in hand to develop domestic energy sources and reduce consumption and dependency on expensive fossil fuels."
Anthony Impey, CEO of Be the Business, said owners now have the confidence to take long term investment decisions, which many have been postponing in response to rising prices.
James Lowman, Chief Executive, Association of Convenience Stores, said the support package will provide a lifeline.
The Food and Drink Federation CEO Karen Betts said it addresses the largest and most volatile cost pressure facing our industry right now.
She added: "Although some aspects of the scheme are still to be clarified, it offers relief to food and drink manufacturers across the 海角视频."
Stephen Phipson CEO of Make 海角视频, the manufacturers’ organisation said: "Industry will need support for a longer period to protect jobs and remain competitive, so the further announcement of a review on future support at the three month stage is reassuring."
What about households?
The Energy Price Guarantee has already been announced for households. A typical household will pay on average £2,500 a year on their energy bill for the next two years from 1 October.
The scheme limits the price suppliers can charge customers for units of gas and electricity, taking account of the Exchequer temporarily funding for two years environmental and social costs, including green levies – worth around £150 – which are currently included in domestic energy bills.
The guarantee supersedes the existing price cap and is expected to save the average household £1,000 a year based on current energy prices from October.
It also comes in addition to the announced £400 energy bills discount for all households and together, they will bring costs close to where the energy price cap currently stands.
Today, the Business Secretary also confirmed equivalent support for households in Northern Ireland alongside a £400 discount on bills through the Northern Ireland Energy Bills Support Scheme (NI EBSS).
Targeted support
The Government also announced today further details on the separate Energy Bills Support Scheme (EBSS) to ensure that the £400 discount to households starting from October will also be available to the 1% of households who would not otherwise have received this support.
Additional funding will be made available so that £400 payments will be extended to include people such as park home residents and those tenants whose landlords pay for their energy via a commercial contract.
Households on alternative fuel
The Government will provide an additional payment of £100 to households who are not able to receive support for their heating costs through the Energy Price Guarantee. This might be because they live in an area of the 海角视频 that is not served by the gas grid and is to compensate for the rising costs of alternative fuels such as heating oil.
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