To help with rising energy costs, the Government has announced that for six months from 1st October 2022, the wholesale cost of energy for all non-domestic users (including all businesses, charities, local authorities etc) will be capped at £211 per MWh for electricity (21.1p per kWh) and £75 per MWh for gas (7.5p per kWh)*.
The Government has announced that they will review the scheme in three months to see whether it should be extended, and have suggested that ‘vulnerable sectors’ may see an extension of the cap.
No, this is not the retail price that businesses will pay – at current market prices, the wholesale cost of energy only makes up around 70% of your electricity bill and 75% of your gas bill – the remainder of your bill is made up of ‘non-commodity charges’ – which include:
- The cost of transporting electricity and gas (maintaining the national grid)
- Ensuring the grid has enough energy capacity to cope with demand
- ‘Green levies/taxes’ (which subsidise and support renewable electricity generation)
- The margin that the energy supplier makes to provide their services
The government is temporarily suspending some of the green levies that make up the non-commodity element of the bill. However, the non-commodity element of the bill will remain significant.
Because suppliers have different margins, some suppliers will be more expensive than others – this is to allow competition to continue within the business energy market.
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