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Energy price cap: This is how it will affect businesses

The energy price cap is the maximum charge a supplier can bill households for their default tariffs, including the standing charge and price of each kWh of electricity and gas.

Ofgem, the Office of Gas and Electricity Markets, sets the cap for summer and winter based on the cost of supplying energy, with the aim to make sure prices are fair for consumers.

Until 2014, the ‘big six’ energy companies controlled 90 per cent the market, until Ofgem, allowed smaller suppliers to compete and potentially drive prices lower for consumers.

READ MORE What is the cheapest time to put the heating on?

Lower prices did not follow and many challengers have gone bust as the price of wholesale gas rises. Britain remains one of the most expensive places in Europe to heat your home.

The energy price cap has already been raised to a record level this winter. Those on standard tariffs and who use the typical amount of energy per household will see an increase of £139 to a whopping £1,277 a year.

Not only this, but those on prepayment meters will be hit with a £153 increase.

Many industry experts forecast it could be set to rise even further next summer, to £1,660 or above.

Does the energy price cap affect businesses?

Small businesses are not covered by the energy price cap and could see their bills increase by a staggering 125 percent this winter.

Businesses whose supplier goes bust during the current energy crisis, may not even see any of the credit they built up with their provider, returned.

A UK Government spokesperson said: “The Business Secretary is in regular contact with the energy industry and Ofgem to manage the impact of high global gas prices and will continue to monitor the situation incredibly closely, including the impacts for small businesses.”

“All energy customers, no matter who their supplier is, can rest assured that even if their supplier fails, there is a robust and well-rehearsed process in place to ensure continuity of supply.”

But company owners are far from reassured.

Unlike normal customers, businesses do not have the same protection. Credit can be lost if Ofgem fails to find an alternative supplier willing to do so and energy can promptly be disconnected if payments are not maintained.

Payment plans are available to companies unable to afford the increased energy costs, but will be charged a disconnection fee if these are not kept up.



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