What’s going on with the energy price cap and what does it mean for business energy?
- Posted by cu_admin
- On 19 October 2021
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The recent surge in energy prices is impacting homes around the country. But what does this mean for the business community and how can you protect your organisation?
The energy market has been making headlines in recent weeks, with natural gas prices at record highs. To protect households from the volatility of the energy market, the energy price cap was first introduced back in 2017 but in recent weeks there has been plenty of talk around the increase in this cap and potential future “significant rises” warned by the energy regulator Ofgem.
Amidst this controversy, suppliers are calling for change and saying the current energy price cap model is “not fit for purpose”. According to these organisations, energy consumers could face a huge cost due to a number of firms going bust.
As uncertainty around energy supply and pricing continues, there have also been calls for an energy price cap to help small businesses. This comes just as the UK economy finds itself trying to recover from the damage done by the COVID-19 pandemic. Last month, nine energy companies went out of business, and 1.7 million energy customers were forced to move to new suppliers and higher rates.
What does all this mean for businesses, and what can you do about it?
Since January 2021, wholesale gas prices have increased a massive 250%, leading to calls for the government to take action as soon as possible. This is because prices are projected to climb further over the coming months, putting more consumers and companies at risk.
Business owners and industry leaders are also calling for protection in the form of a price cap to ensure that companies do not suffer from crippling increases in energy costs. The British Chambers of Commerce, in particular, have called for a price cap to be introduced for small and medium-sized businesses with 250 employees or fewer. The absence of a cap leaves companies at the mercy of fluctuating market rates and a very uncertain future.
Those organisations due to renew their fixed energy contracts in the coming weeks and months are currently facing the kind of hike in costs that can seriously damage profitability. The BBC spoke to one entrepreneur – nursery and soft play owner Gordon Foster – whose energy contract is up for renewal, and who is looking at paying eight times his current rate in a contract that would tie him in for years.
If you have a contract that expires in the next few months, you must act now to get ahead of any potential increases as we move further into the winter period. For businesses with longer contracts, it is still advised to complete a review as longer-dated contracts are being priced more favourably now.
By reviewing your business energy with Consultiv Utilities, you won’t have to struggle alone. We can ascertain your total energy budgets and provide peace of mind that, despite costs increasing, you will retain both, competitive & resilient supply offers available to you. This ensures you can budget accordingly for future energy overheads.
Let us help you make more informed decisions regarding your future energy budgets. Our review comes with no obligation to proceed and is entirely free.
Get in touch with our team today to speak to our consultants, or sign up to receive more information on how to make the most of your business energy. Contact Us