The energy price cap is being paid for by small businesses.

by | Feb 10, 2022

The energy price cap is being paid for by small businesses.

Small businesses are being charged over 300% more for exactly the same energy as domestic customers.

While many people are rightly concerned about the 54% rise in the energy price cap, there’s a lack of interest in the predicament facing small businesses. They are extremely exposed to rising energy costs and many small business owners fear that they will be forced out of business unless the treasury announces measures to offset rising energy costs.

The downside of the domestic energy price cap is that small businesses are being made to bear the brunt of skyrocketing energy costs, as suppliers raise business tariffs to offset losses in the price capped, domestic market. Small businesses (Micro businesses)  are offered the same protections as domestic users by the energy regulator (Ofgem), in virtually all aspects of the energy market, except the price cap.

One prominent energy suppliers domestic gas tariff called “ Online fixed Mar 2023” (Fixed price from 01/04/2022 to 31/03/2023) offers a gas unit rate of 3.339 pence per kWh and a standing charge of 14.873 pence per day in the Bournemouth area. While the same supplier’s business arm would charge a small business, using exactly the same amount of gas, a unit rate of 10.25 pence per kWh and a standing charge of 45.86 pence per day in the Bournemouth area for the same gas.

Small businesses are being hit hard when renewing supply contracts. Pubs, restaurants, hotels, care homes, butchers, corner shops and many more energy intensive businesses are coming under increasing pressure due to energy prices. These increases come after a particularly tough period for the economy due to the pandemic.

There has been no indication from the government yet on any potential measures to protect small businesses from the huge increase in business energy costs.

Various ideas have been floated such as a reduction in business rates, VAT or tax rebates, but it is highly unlikely that these will come into effect in time, if at all. Which leaves small businesses with two options : they can either reduce profits, which to many small business owners means reducing their wages, or increase prices, which will further feed into the upward inflationary cycle currently causing such concern to the head of The Bank of England, Andrew Bailey.

We’ve launched a petition to lobby the government to extend the price cap to cover small businesses. Without help many local, small businesses will close and our highstreets will never be the same. So, please sign and share the petition so we can start putting pressure on those in power to do something.

Click to sign petition

Final thoughts

The perfect storm of Brexit, COVID, inflation and the energy price crisis is a real threat to the survival of  small businesses. They employ nearly 14 million people and contribute over £1.6tn to the UK economy, they are the backbone of the country, the lifeblood of our economy and an Important material in the fabric of our society . They must be protected.

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