UK businesses will see their energy bills cut by around half of their predicted level this winter under a support package announced by the UK government.
Effective from 1 October, the six-month scheme will fix gas and electricity prices for non-domestic energy customers including businesses, charities, schools and hospitals.
It will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts.
Wholesale prices are expected to be fixed at £211 per MWh for electricity and £75 per MWh for gas. The discount will be applied automatically to bills.
Business groups have welcomed the support package, but warned that further help may be needed after the winter.
Kate Nicholls, chief executive of UKHospitality, said the industry was “relieved” by the scheme and welcomed the fact that it covered businesses of all sizes.
Matthew Fell, chief policy director of the CBI, said that the support package would “ease worries about otherwise viable businesses shutting-up shop” and noted that smaller companies in particular will benefit from the discounted rate.
“Businesses will also want to know more about the exit strategy and what happens when the six-month cap runs out,” Fell added.
“The long-run solution is to double-down on energy security and to incentivise firms to push ahead with ambitious energy efficiency programmes to lower demand.”
Pub and brewing businesses across the UK are at risk of closure in the coming months because of “out of control” energy bills, the industry has warned.
Bills have increased by an average of around 150% across the sector, with some businesses facing price hikes of more than 300%, the British Beer and Pub Association said.
There are concerns that the crisis could cause “real and serious irreversible” damage to the industry.
In an open letter to Prime Minister Boris Johnson, leaders of six of the country’s biggest pub and brewing companies said: “Without swift and substantial intervention from Government there is no doubt we will witness a huge number of pubs close their doors for good, leaving individuals without jobs during a cost-of-living crisis and communities without its social heartbeat.
“Breweries that supply them are equally facing eye-watering increases in energy costs.”
The industry called for an urgent support package that effectively caps the price of energy for businesses and additional grant support for pubs.
“While the Government has introduced measures to help households cope with this spike in prices, businesses are having to face this alone, and it is only going to get worse come the autumn,” said Nick Mackenzie, chief executive of Greene King.
“There are pubs that weathered the storm of the past two years that now face closure because of rocketing energy bills for both them and their customers,” added Emma McClarkin, chief executive of the British Beer and Pub Association. “If we lose them, we not only lose businesses and the jobs that go with them, but also the beating heart of communities across the country where people gather in times of need. We need an energy cap for businesses before it’s too late.”
Oil and gas firms operating in the UK have been hit by a 25% windfall tax on their profits, which have soared in recent months.
The one-off Energy Profits Levy will help pay for a £15bn package of measures to help households with the cost of living crisis.
Chancellor Rishi Sunak said the new windfall tax was necessary because the industry is making “extraordinary profits not as the result of recent changes to risk taking or innovation … but as the result of surging global commodity prices driven in part by Russia’s war”.
The opposition Labour party has been calling for such a tax since January.
Every household in the UK will get £400 off their energy bill this autumn. The previously announced £200 discount will be doubled to £400 and turned from a loan into a grant, with future repayments cancelled.
The poorest households will also get a payment of £650 to help with the cost of living.
Inflation has climbed to its highest level in 40 years after households were hit with higher energy bills.
The Consumer Prices Index (CPI) jumped to 9% in the 12 months to April 2022, from 7% in March.
This is the highest level of inflation since March 1982, when it stood at 9.1%.
Behind the latest rise was the unprecedented 54% increase in the energy price cap which kicked in at the start of the month. This has resulted in households paying £1,971 per year on average for gas and electricity — an amount that is expected to hit almost £2,600 when the price cap is next adjusted in October.
“Around three-quarters of the increase in the annual rate this month came from utility bills,” said ONS chief economist Grant Fitzner.
Higher fuel and food prices, driven by the Ukraine war, also contributed to the increase in the cost of living.
Inflation expected to continue to rise, peaking at over 10% later this year, and the Bank of England has warned this could lead to a recession.
Plans for two major wind farms on the Isle of Lewis have been challenged by local inhabitants after developer EDF Energy said the turbines would need to be higher than expected, according to the Guardian.
The French energy firm said the turbines would need to be constructed to a height normally used for installations at sea in order to be economically viable and qualify for government subsidies.
Kerry MacPhee of EDF Energy told the community that one of the wind farms could be 200m tall and the other 187m, revised from 150m and 145 as previously outlined. The current largest wind turbine in the UK is 193.5m, around 60m taller than the London Eye.
MacPhee, community liaison officer for the project, said the changes were intended to increase the potential chances of winning future auctions for low-carbon electricity and would “unlock substantial benefits for Lewis”.
The company said it was possible that fewer turbines would be needed to offset the increased height, but this was not certain. The higher turbines would need a fresh planning application.
After several years of failing to provide support for onshore wind farms, in 2017 the government came out in support of schemes in remote areas such as the Isle of Lewis.
Bidders for government subsidies are increasingly dependent on the scale of their projects to win support for their schemes, based on achieving the lowest subsidy price. The next auction is due to take place in spring 2019.
Plans to develop an open cast coal mine in the North East of England have been rejected on climate change grounds, according to Reuters.
Last year Northumberland County Council approved a proposal from the Banks Group to extract 3m tonnes of coal from near Druridge Bay, Highthorn. Supporters of the project said it would boost local employment.
However, the Minister for Local Government has rejected the plans. The UK is set to phase out coal power stations by 2025 in order to meet carbon emission targets in accordance with international agreements.
Following a public enquiry, Minister Sajid Javid decided against permitting the open cast or surface mine to go ahead. A government report said “the scheme would have an adverse effect on greenhouse gas emissions and climate change of very substantial significance.”
Banks Mining’s director Gavin Styles said the decision was made for “purely political reasons” and noted that Britain is still dependent on coal for some purposes.
Styles said: “The importance of securing investment in North East England, creating dozens of high quality local jobs, and opening up opportunities for regional suppliers to win substantial contracts could not be any clearer.”
Banks Group claimed the mine would employ 100 people and generate almost £50m in related contracts and community benefits.
Britain has a legally-binding target to but greenhouse gas emissions by 80% from 1990 levels by 2050.
New rules from energy regulator Ofgem could see UK consumers save £5bn on bills over five years, according to BBC News.
The energy watchdog wants to reduce the amount customers pay towards improving energy networks through their bills. The plans could save consumers around £15-25 each year.
The plans, which are scheduled to come into force in 2021, will cut profitability of energy network companies.
National Grid runs the UK’s main energy infrastructure. IT said it would continue working with Ofgem “to achieve the best outcomes for all stakeholders.” National Grid said that Ofgem was taking its key concerns, such as long-term investment in critical infrastructure, into consideration.
Since 1990 energy network companies have invested around £100bn into local and national grid infrastructure. As a result, power cuts have been reduced by around 50% since 2001. According to Ofgem, the cost of transporting electricity around Britain has fallen by around 17% since the mid-1990s, when calculated by the retail price index measure of inflation.
The regulator has said energy network companies need to begin consulting more closely with customers about business plans, to ensure that customers want and are willing to pay for changes. Ofgem also promoted the use of modern technology to optimise performance of grids, sharing the resulting savings with customers.
The changes come after a 2017 report by Citizens Advice which claimed the energy network companies had made £7.5bn in ‘unjustified’ profits.
The cost of energy generated in the UK by offshore wind is cheaper than nuclear power for the first time, according to figures from the Department for Business, Energy and Industrial Strategy.
The disparity in costs was revealed by an auction for government subsidies, in which private contractors bid for opportunities to generate power based on bids for the lowest subsidy.
Bidders were prepared to build offshore wind farms based on government subsidy of £57.50 per megawatt hour for 2022-23. In contrast, the subsidy secured for the new Hinkley Point C nuclear power station is £92.50 per megawatt hour.
In the last offshore wind subsidy auction in 2015, projects secured subsidies of between £114-120 per hour. This means the subsidy level has halved in the last two years.
Emma Pinchbeck of Renewable UK told the BBC that the latest figures are “truly astonishing. […] We still think nuclear can be part of the mix – but our industry has shown how to drive costs down, and now they need to do the same.”
Tom Greatrex of the Nuclear Industry Association said: “It doesn’t matter how low the price of offshore wind is. On last year’s figures it only produced electricity for 36% of the time.”
The lower costs of offshore wind were achieved through larger turbines, higher voltage cables and lower cost foundations. A downturn in the oil and gas sector and growth within the UK supply chain also contributed.
Perth-based electricity and gas company SSE, which operates mainly in the UK and Ireland, stated today that its retail arm is expected to report a loss on its adjusted profit before tax in the first half of the company’s financial year.
According to the company, the expected loss is a result of increases in wholesale gas prices, higher costs and lower energy consumption. SSE saw an operating profit at its retail arm of GBP75.7m in the first half of 2012 and a GBP101.4m loss in the same period of 2011.
However, despite the predictions SSE said it is on target to raise dividend payments to its shareholders, which will exceed retail price inflation for the 2013-14 financial year. It also expects its wholesale and networks divisions to be profitable in the six months to the end of September 2013. These results will be published on Wednesday 13 November 2013.
Finance Director of SSE, Gregor Alexander, commented; “Despite challenging energy market conditions, SSE has made solid progress in recent months, including taking a number of specific steps to help small business customers and improve standards for household customers. We continue to benefit from maintaining a balanced range of energy businesses, illustrated by again meeting the criteria for a single A credit rating. Despite the intensifying political debate, we will maintain our operational and financial discipline, to enable us to deliver an above-inflation increase in the dividend for this financial year and beyond.”
SSE is said to be the second largest energy supplier in the UK and has 9.5 million customer accounts. It also has a 50% stake in the 504MW Greater Gabbard offshore wind farm.
Household energy usage in England and Wales has fallen by almost a quarter since 2005, according to Office for National Statistics (ONS) data released today.
ONS area based analysis for household energy consumption in England and Wales between 2005 and 2011 reveals that all of the English regions and Wales consumed 24.7% less energy per household during the period, a drop from 26.2 megawatt hours (mWh) in 2005 to 19.7mWh in 2011. Over the seven years, households in the East Midlands consumed the most energy consumption each year; however this usage was reduced by 29.4%, from 39.0mWh per household in 2005 to 27.5mWh in 2011.
The ONS data shows that on average, households in the milder climate of South West of England used the least energy for five years during the period and Wales achieved the lowest energy consumption per household in 2005 and 2011.
According to the BBC, consumers may be using less energy and economising because of sharp rises in energy bills, which are said to have increased by 28% in the last three years. However, more households are taking energy efficiency measures, such as installing insulation, double-glazing and new boilers.
Public awareness of energy consumption and environmental issues is said to be increasing and the UK government has been making efforts to encourage lower energy usage with the introduction of the Green Deal initiative, where various energy efficient improvements are offered to householders at no upfront cost. This includes work such as cavity or loft insulation and the resident will eventually pay for them through small payments taken out energy bills.
In addition, smart meters are to be installed in 53 million homes by 2020. These meters provide householders with a measurement of exactly how much energy they are using at any given time.