Do small businesses get support for their energy bills?
5-minute read
As a small business owner you’re not only impacted by the rising cost of energy in your home, but the expense of keeping the lights on and equipment running at work.
Simply Business research reveals that rising fuel and energy costs are the biggest challenge for 54 per cent of small businesses, but what support is available to help them?
With energy bill support recently announced by the government, we look into what this means for the self-employed and small businesses.
This article was updated on 31 October 2022.
What energy bill support did the government announce for small businesses?
There’s a cap on how much energy suppliers can charge consumers for gas and electricity, which is reviewed every three months. This means there’s a limit to the standing charges and unit rates for people on a default tariff (so it's a cap on units rather than what you pay).
But businesses pay a different rate for their gas and electricity – and unfortunately there isn’t a cap on how much suppliers can charge.
In an announcement to the House of Commons on 8 September, Liz Truss announced energy bill support for consumers and businesses.
She said that the energy price cap would be fixed at £2,500 a year for a typical home for two years from 1 October and that green levies would also be temporarily suspended.
While there isn’t a price cap for businesses, Liz Truss confirmed an equivalent guarantee for businesses for six months.
This means that energy costs for businesses will be capped at the same price per unit as consumers. Read more about the Energy Bill Relief Scheme.
Following his appointment as chancellor in October, Jeremy Hunt said that after April 2023 the scheme will be replaced by a more targeted approach that will "cost the taxpayer significantly less than planned".
When the extra support was announced, Liz Truss said that businesses with the ‘wherewithal’ to support themselves through this tough cost of living crisis should look at seeing where they can improve energy efficiency (there’s more on that below).
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What if I run my business from home?
If you run your business from home then it’s unlikely that you’ll have a business energy account. This is only possible if you use 50 per cent or more of your energy to run your business at home.
However home-based businesses won’t pay more than the energy price cap and will be able to make use of the Energy Bills Support Scheme (more on this below).
Has the government promised any long-term fixes?
During her statement, Liz Truss said that the government would create an ‘energy supply taskforce’ to focus on accelerating all sources of domestic energy.
She promised two reviews. One to review energy regulations to fix underlying problems on supply and affordability, and another to review how we reach net zero in the quickest and most efficient way.
Following Truss's resignation, it's not clear whether the new prime minister, Rishi Sunak, will go ahead with these reviews. More details are likely to become clear when the next economic statement is made on 17 November.
Alan Thomas, UK CEO at Simply Business, said: "The news that business energy costs will be capped for six months will have been welcomed by small business owners – providing short-term relief and ensuring more businesses can make it through the coming winter.
"But it’s clear that small businesses need more. They need a sustainable, long-term solution. With many still in recovery mode from the impact of the pandemic, rising costs and spiralling energy bills will put countless small firms at serious risk. The message from small businesses is clear: this is a pandemic level crisis and the clock is ticking."
What is the Energy Bills Support Scheme?
While this isn’t specifically support for small businesses, it’s worth noting that eligible households in Great Britain will get a £400 discount on their energy bills from October.
The Energy Bills discount goes to all households with a domestic electricity connection in England, Scotland, and Wales.
You don’t need to do anything to receive this. The discount is applied monthly over a six month period, starting from October 2022.
What if I can’t pay my business energy bill?
The best thing to do if you’re worried about paying your energy bill is to contact your supplier to arrange an energy payment plan. They may be able to help by giving you more time to pay or offering you a break or reduction in payments. You may also be able to ask for access to hardship funds.
Citizens Advice has a consumer helpline you can call if you’re in debt or if you’ve got a bill you can’t afford and your supplier hasn’t offered you a payment plan.
Don’t let financial problems build up or ignore them. The Business Debtline is a charity that can provide free debt advice to small businesses in England, Wales, and Scotland. You can speak to one of their advisers over the phone or use their live web chat service.
It’s also important to remember that not paying your bills can impact your credit score.
Visit Ofgem’s energy advice page for more information.
If you're looking for more support on how to manage your business finances, visit our cost of living hub for small businesses and the self-employed.
How can I reduce my business energy bills?
Shopping around for a new deal, making your business more energy efficient, and measuring how much you’re using could help you reduce your energy bills.
Look for a new energy deal
Many businesses may be looking to renew their tariff or shop around for a new energy deal. However you’ll only be able to do this if your existing contract is coming to an end, or you’re not tied into a contract.
- contact your energy supplier – ask your supplier if they can offer you a better deal
- use comparison websites – research suppliers and rates for a new business energy tariff
- check when your contract ends – look at how much notice you need to give your supplier if you want to switch
Should I fix my energy deal?
Switching to a fixed-price energy tarrif is unlikely to save you money.
Check what deals are out there and see if it's likely to be chearper in the long run.
Improve energy efficiency
There may be things you can do to make your business more energy efficient. These don’t all have to be expensive changes, and you could look into funding to help your business become greener.
For example, you could replace lights with LED bulbs or install sensors that dim lights in bright spaces. And make sure you turn off any lights and machinery you’re able to at the end of each day.
Understand your energy usage
If you haven’t already, consider installing a smart meter for your business. This can help you understand how you’re using your energy, and avoid paying estimated bills. This means you’ll only pay for what you actually use.
It’s worth noting too, energy suppliers can’t charge you for energy used more than 12 months ago if you’re a ‘microbusiness’. Ofgem has more information on back-billing rules.
Submit meter readings
Pay for what you actually use as a business (and a consumer) by submitting meter readings to your supplier. You'll typically do this every month and can do this online or by phone.
If you have a smart meter then this will happen automatically.
Citizens Advice has a guide on how to read your gas or electricity meter if you're not sure.
Research energy efficiency grants
You may be able to access funding to improve the energy efficiency of your business. Ofgem has more information on what's available.
More useful articles for small business owners
How are rising costs affecting your business? Let us know in the comments.
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Written by
Catriona Smith
Catriona Smith is a content and marketing professional with 12 years’ experience across the financial services, higher education, and insurance sectors. She’s also a trained NCTJ Gold Standard journalist. As a Senior Copywriter at Simply Business, Catriona has in-depth knowledge of small business concerns and specialises in tax, marketing, and business operations. Catriona lives in the seaside city of Brighton where she’s also a freelance yoga teacher.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
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