What the news means for your company
Last week Ofgem announced that the domestic energy price cap for electricity and gas would be lowered to £2,074 a year from July 1st 2023.
But what about the great neglected energy users in the UK? Business owners and directors who have to keep their lights on, their machines and computers running and their staff warm?
What changes are happening to their bills and how much can they expect to be paying in the months ahead.
We look at the current situation surrounding business energy bills in more detail and what it means for your company.
No movement
The first point to make is that Ofgem’s energy price cap only covers domestic energy users.
It doesn’t cover businesses, charities, care homes, schools or hospitals.
Instead the government operates the Energy Bills Discount Scheme (EBDS) which will run until April 2024 which offers eligible companies a discount on the wholesale price of energy.
There are larger discounts available to certain energy intensive businesses such as manufacturing, chemicals or steel for example.
EBDS began on April 1st 2023 and is expected to offer up to £5.5 billion in support over the next 12 months.
Compared to the previous Energy Bill Relief Scheme (EBRS) which operated from October 2022 to March 31st 2023 it’s a total of £12.5 billion less.
Rising rates
Remember, there is no cap on business energy.
Suppliers can increase their out-of-contract rates by as much as they need to in order to cover any increased costs so businesses that do not have fixed energy contracts can find themselves paying directly for any fluctuations in the market.
Below is a table that compares the average business energy rates from March 2021 (before the Russian invasion of Ukraine which precipitated the energy price crisis) along with average rate prices from September 2022 and April 2023.
While prices are reducing, unit rates have doubled in this time and standing charges are also continuing to rise.
Average Business gas unit rates per kWh
| Business size | March 2021 average | September 2022 average | April 2023 average |
| Micro business | 4.2p | 30.2p | 10.3p |
| Small business | 4.1p | 30.2p | 10p |
| Medium business | 3.7p | 28p | 9.9p |
Average Business gas standing charges
| Business size | March 2021 daily | September 2022 daily | April 2023 daily |
| Micro business | 31.0p | 32.3p | 55p |
| Small business | 35p | 40p | 55p |
| Medium business | 46p | 41.9p | 59p |
Average Business electricity unit rates per kWh
| Business size | March 2021 average | September 2022 average | April 2023 average |
| Micro business | 17.3p | 83.3p | 32.4p |
| Small business | 16.9p | 82.8p | 32.8p |
| Medium business | 16.5p | 80.1p | 33.1p |
Average business electricity standing charges
| Business size | March 2021 daily | September 2022 daily | April 2023 daily |
| Micro business | 28.6p | 35.9p | 58p |
| Small business | 29.7p | 39.5p | 55p |
| Medium business | 29.4p | 35p | 63p |
What do the average business energy bills look like?
Because the market is still volatile and every business uses energy in different ways, it’s virtually impossible to nail down a true average amount but we can produce an estimate based on an assumed annual usage based on business size.
For this calculation we have made the following assumptions based on their annual gas and electricity usage:-
- Micro business – 10,000 kWh
- Small business – 22,500 kWh
- Medium business – 47,500 kWh
Average business gas bill
| Business size | July 2022 average | September 2022 average | April 2023 average |
| Micro business | £2,190 | £3,138 | £1,230 |
| Small business | £3,878 | £6,941 | £2,450 |
| Medium business | £8,922 | £13,453 | £4,918 |
Average business electricity bill
| Business size | July 2022 average | September 2022 average | April 2023 average |
| Micro business | £5,263 | £8,461 | £3,415 |
| Small business | £10,560 | £16,704 | £7,570 |
| Medium business | £12,243 | £32,168 | £15,949 |
You can see why many directors and business owners of micro, small and medium sized businesses are still feeling uneasy about their energy bills for the rest of the year when the smallest combined gas and electric average amount we could find for a micro business is £4,645.
Which is why we offer a free initial consultation to anybody who wants to plan a better future for their business for the rest of 2023 and beyond.
Once our advisors get a clearer picture of where your business is and the immediate and longer term issues facing it beyond mounting energy bills, they will be able to recommend different options you can begin to implement straight away that will help you get you closer to your business goals.