Energy Price Guarantee
Post Author:
Rona Burns
Date Posted:
September 13, 2022
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The UK Prime Minister, Liz Truss announced that from 1 October, a new ‘Energy Price Guarantee’ will be introduced. The new Guarantee will limit the price suppliers can charge customers for energy and will supersede the existing energy price cap.
The UK Government will provide the energy suppliers with the difference between this new lower price, and what energy retailers would charge their customers were this not in place. Schemes previously funded by green levies will also continue to be funded by the UK Government during this two year period to ensure the UK’s investment in home-grown, secure renewable technologies continues.
Domestic Consumers
This will mean that a typical UK household will now pay up to an average of £2,500 a year on their energy bills for the next two years. The Guarantee is automatic and will apply to all households in Scotland, England and Wales with the same level of support made available to households in Northern Ireland.
It has been estimated that this will save the average household at least £1,000 a year based on current energy prices from October 2022. This is in addition to the £400 energy bills discount previously announced for all households. The £1,000 per year saving takes account of the temporary removal of green levies, worth around £150, from household bills.
Households who do not pay directly for mains gas and electricity, such as those living in park homes or on heat networks, will be no worse off and receive support through a new fund.
Businesses
A new six-month scheme for businesses and other non-domestic energy users (including charities and public sector organisations, such as schools) will offer “equivalent support” as is being provided for domestic consumers.
It is not yet clear what this means as the UK government has not yet published the unit cost for gas and electricity that they are using to generate the domestic cap. Therefore they cannot yet confirm whether the same unit cost will be applied to business customers.
After this initial six-month scheme, the UK Government will provide ongoing, focused support for vulnerable industries. There will be a review in 3 months’ time to consider where this should be targeted to make sure those most in need get support.
We will publish more information about the Energy Price Guarantee for businesses as soon as it becomes available.
The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.
