Businesses fear energy price hike after support scheme ends

The plan will take effect on October 1 and last until March 31 (Lauren Hurley/PA) (PA Archive)
The plan will take effect on October 1 and last until March 31 (Lauren Hurley/PA) (PA Archive)

A group representing Scottish businesses has voiced concerns over sharp energy price rises after the end of a new Government scheme.

UK Energy Secretary Jacob Rees-Mogg announced on Wednesday plans to slash the cost of wholesale gas and electricity for non-domestic customers for six months from October.

The Government cap will mean the “supported wholesale price” will be £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas – around half the projected price on the open market and equivalent to the scheme in place for households.

Businesses who agreed fixed-term contracts on or after April 1 of this year will see the wholesale part of their bill capped automatically.

A review will take place in three months that will look at support to be made available after March, which the Government said will focus on “the most vulnerable non-domestic customers and how the Government will continue assisting them with energy costs”.

Scottish Chambers of Commerce chief executive Liz Cameron welcomed the scheme, but raised concerns that energy prices could spike after March and put companies at risk, as well as calling for clarity on who will be able to access support after the deadline.

She said: “For those firms that will benefit, the six-month cap is not enough for them to be sufficiently reassured that the problem won’t return when the cap is no longer in effect.

“We are concerned that even more sudden rises in energy bills will await firms once the cap is lifted.

“We would urge the UK Government to engage immediately with the business community to properly define the ‘vulnerable industries’ cited for support after the original six-month cap.”

The Night Time Industries Association Scotland – which represents pubs, bars and nightclubs – welcomed the scheme but warned it is unlikely to save businesses which have incurred high levels of energy debt in recent months, as well as saying firms that renewed their contracts before April 1 this year will continue to struggle with “untenable” energy costs.

The body also raised concerns that other costs outside of the wholesale price, such as network charges or operating costs, could be increased and impact businesses, which the spokeswoman said is “clearly not sustainable”.

Meanwhile, Scottish Secretary Alister Jack said the scheme will “give much-needed certainty to Scottish businesses, schools, hospitals and other public services and is being introduced as a matter of urgency as we move into winter”.

He added: “This comes on top of the Prime Minister’s monumental intervention for domestic customers, saving the average household £1,000 per year on fuel bills, and in addition to the £37 billion package of support announced earlier this year.

“The UK Government is also taking vital steps to strengthen our energy security.

“The UK Treasury was able to give support to people up and down the country when we faced Covid and its strength is proving vital again as we continue to tackle the rising cost of living.”

Scottish Conservative finance spokeswoman Liz Smith said the announcement provides a necessary “furlough-level intervention”.