GP practices can expect to see their energy prices capped at ‘less than half’ of wholesale prices this winter, the Government has said.
Business secretary Jacob Rees-Mogg today announced that energy prices for businesses – including GP practices – across the UK will be capped, with the difference paid by the Government.
Under the new Government Energy Bill Relief Scheme, which will initially run for six months and apply to energy usage from 1 October to 31 March, the Government will provide a discount on wholesale gas and electricity prices.
The Government said the discounted price per unit of gas and electricity is ‘expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter’.
It added that it will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. The support will be automatically applied to bills without any need to apply to the scheme.
This ‘includes the removal of green levies paid by non-domestic customers who receive support under the scheme’, it said.
However, the price reduction level will vary depending on each business’s contract type and circumstances, such as whether the wholesale element of the price they are paying is above the Government’s discounted price.
How will the GP practice energy price discount work?
- 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.
The Government said it will publish a review of the scheme in three months to ‘inform decisions on future support after March 2023’.
The review will focus on identifying the ‘most vulnerable non-domestic customers’ and how the Government will continue assisting them with energy costs, it added.
Emergency legislation to underpin the scheme will be introduced at the earliest opportunity when Parliament returns from recess in October.
A ‘parallel scheme’ will be established in Northern Ireland that is ‘based on the same criteria and offering comparable support, but recognising the different market fundamentals’, the Government said.
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.’
She added: ‘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.’
Chancellor Kwasi Kwarteng said the Government has ‘stepped in to stop businesses collapsing, protect jobs, and limit inflation’.
The Government set out the scheme’s aims of ‘supporting growth, preventing unnecessary insolvencies and protecting jobs’.
And Pulse previously revealed that GP practices themselves may end up tens of thousands of pounds in deficit this winter amid rising inflation and fuel costs.