Currently, there has been a lot of talk about the domestic energy price cap changing and energy bills rising.
Although the amount energy suppliers can charge businesses has been cut by Ofgem, bills for domestic energy customers are still set to rise as support from the government eases.
This will lead a typical household bill to rise to £3000 in April. The reason bills will be rising is due to the domestic energy price cap becoming less generous and the winter discount that allowed for a £400 discount on all bills also coming to an end.
With the government’s current support domestic energy consumers have been compensated for the difference between the energy prices cap and the Energy Price Guarantee. The price cap is going to drop to £3,280 in April from £4,270. However, this is a rise in energy bills as the energy guarantee capped bills at £2500 for an average household. Therefore, without this, a lot of households are predicted to struggle with bills.
As the energy market has settled compared to last year domestic customers will most likely not see bills of £3280, however, they are still expected to see bills raised due to not receiving the same support from the government.
The government seem to believe that we are over the worst part of the energy crisis, which is allowing them to reduce support. However, as the energy market is still volatile prices could rise again as quickly as they came down.
With continuing issues over the UK’s security and the uncertainty of the EU being able to secure gas contracts to refill their storage tanks, there is no guarantee that the energy market will not see the same volatility as last year.
Does this affect business energy?
This change in domestic energy support will not impact business energy prices. This is because the reduction in support does not affect wholesale energy prices only what the government is willing to pay to help with domestic energy bills.
Although this doesn’t affect business energy prices your business should still be aware that this could have some backlash for you. With energy bills potentially rising you should prepare for consumers to scale back on their spending, which could increase competition in your industry as people will have less disposable income.
This means that your business will have to think about how to reduce overhead spending where possible to make up for this. The easiest way to do this could be to start with your energy bills.
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