Event businesses will need more support than the six month energy price cap, the Business Visits & Events Partnership (BVEP) has warned.
Liz Truss’s government outlined plans to introduce a price cap on all businesses’ energy bills, but BVEP still expects to see “substantial” price rises and decreased margins.
New support for households, businesses and public sector organisations facing rising energy bills in Great Britain and Northern Ireland were unveiled by business secretary Jacob Rees-Mogg on Wednesday 21 September.
Commenting on the price cap, Chris Skeith OBE, chair of BVEP said:
The government has identified the need for businesses to plan ahead with some certainty which is to be applauded. It has also identified that some sectors will need additional support going forward and the UK events industry must be part and parcel of that alongside other key sectors such as hospitality. The recent events of the weekend have shown the UK is best in class at delivering for the country, but many parts are still in a fragile state of recovery post pandemic, so need to be alongside hospitality and the like to ensure we are match fit to drive growth and trade for the government and the sectors we serve.’
Michael Hirst OBE, chair of the BVEP Government & Advocacy Working Group told EN:
Every little helps but event businesses will still experience substantial rises in their energy bills which will inevitably lead to increased prices or decreased margins.
BVEP partners continue to step up their initiatives on energy efficiencies and sustainability measures to reduce costs wherever possible. These practices are shared between partners to optimise best practices.
If current energy prices remain at this level event businesses will look for support beyond the initial six months indicated by the Government”
The government’s Energy Bill Relief Scheme, will provide a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals) whose current gas and electricity prices have been significantly inflated in light of global energy prices. This support will be equivalent to the Energy Price Guarantee put in place for households.
It will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period for all non-domestic energy users. The savings will be first seen in October bills, which are typically received in November.
To administer support, 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. 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.
The level of price reduction for each business will vary depending on their contract type and circumstances:
- Non-domestic customers on existing fixed price contracts will be eligible for support as long as the contract was agreed on or after 1 April 2022. Provided that the wholesale element of the price the customer is paying is above the Government Supported Price, their per unit energy costs will automatically be reduced by the relevant p/kWh for the duration of the Scheme. Customers entering new fixed price contracts after 1 October will receive support on the same basis.
- Those on default, deemed or variable tariffs will receive a per-unit discount on energy costs, up to a maximum of the difference between the Supported Price and the average expected wholesale price over the period of the Scheme. The amount of this Maximum Discount is likely to be around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market developments. Non-domestic customers on default or variable tariffs will therefore pay reduced bills, but these will still change over time and may still be subject to price increases. This is why the Government is working with suppliers to ensure all their customers in England, Scotland and Wales are given the opportunity to switch to a fixed contract/tariff for the duration of the scheme if they wish, underpinned by the Government’s Energy Bill Relief Scheme support.
- For businesses on flexible purchase contracts, typically some of the largest energy-using businesses, the level of reduction offered will be calculated by suppliers according to the specifics of that company’s contract and will also be subject to the Maximum Discount.
Chancellor Kwasi Kwarteng said:
We have stepped in to stop businesses collapsing, protect jobs, and limit inflation.
And with our plans to boost home-grown energy supply, we will bring security to the sector, growth to the economy and secure a better deal for consumers.”
A parallel scheme, based on the same criteria and offering comparable support, but recognising the different market fundamentals, will be established in Northern Ireland.
Emergency legislation will being introduced to underpin the scheme, at a date still to be set, once Parliament is back from recess in October.
Prime Minister Liz Truss said:
I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs and livelihoods.
As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind.
At the same time, we are boosting Britain’s homegrown energy supply so we fix the root cause of the issues we are facing and ensure greater energy security for us all.”
Kate Nicholls, CEO of UKHospitality said:
This intervention is unprecedented and it is extremely welcome that Government has listened to hospitality businesses facing an uncertain winter. 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.”