Energy Prices Support Package

I have received the letter below from the Secretary of State for Business, Energy and Industrial Strategy outlining support for businesses, charities & public sector organisations (such as schools and hospitals) against rising energy prices. Further information can be found on the following weblink: Energy Prices Support Package

Please note that this weblink is regarding support for non-domestic customers only. I will publish the link to updated support for households once it becomes available:

Dear Members,

ENERGY PRICES SUPPORT PACKAGE

Following the Prime Minister’s announcement on 8 September, the Government is today publishing further details of the support we are offering to people and businesses in the face of soaring energy prices. This package of unprecedented assistance for the whole UK provides the certainty families and business owners need to help them manage their energy bills.

Details of the Energy Price Guarantee for domestic consumers and the Energy Bill Relief Scheme for business and non-domestic properties are available on gov.uk. The Chancellor of the Exchequer will set out more details of the costs of the Government’s support as part of his fiscal statement on 23 September.

We have designed the schemes to be simple for energy consumers. Families and eligible businesses do not have to take action or apply for support, energy suppliers will automatically apply the appropriate reduction via their energy bill. Households will receive an equivalent level of financial support wherever they are in the UK. The same is true for businesses across the UK too.

The Energy Price Guarantee for Great Britain will ensure that a typical household pays an average £2,500 a year for their energy, from 1 October 2022 for the next two years. On average usage, a household will save £1,000 a year. This is in addition to the already announced £400 Energy Bills Support Scheme for households across the UK. The most vulnerable UK households will also continue to receive £1,200 of support. For consumers in England, Scotland and Wales who pay for their energy through a monthly, quarterly or other regular bill, the Energy Price Guarantee will be applied when their bill is calculated. The Guarantee limits the amount the bill payer can be charged per unit of gas or electricity, so the exact bill amount will continue to be influenced by how much energy is used.

The Energy Bill Relief Scheme will provide protections for all businesses, voluntary sector and public sector organisations in Great Britain which face excessively high energy bills over the winter period, whether they are on existing fixed price contracts agreed on or after 1 April 2022, signing new fixed price contracts, variable or deemed tariffs or flexible purchase contracts To administer support, the Government has set a Supported Wholesale Price – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter – which is a discounted price per unit of gas and electricity.. Suppliers will pass the reduction in the wholesale price through to their customers.

The Energy Bill Relief Scheme will run initially for 6 months covering energy use from 1 October 2022 until 31 March 2023. We will publish a review of the scheme after 3 months. This review will consider how best to offer further support to customers who are the most vulnerable to energy price increases. These are likely to be those who are least able to adjust, for example by reducing energy usage or increasing energy efficiency.

As the Prime Minister said on 8 September, the Government is bringing forward emergency legislation to underpin the delivery of our support package. We will introduce a Bill immediately after Parliamentary Recess. It will include measures for the GB Energy Price Guarantee for domestic consumers and Energy Bill Relief Scheme for businesses and non-domestic properties so all of GB receives equivalent support; and enable the delivery of comparable schemes in Northern Ireland. It will provide powers to enable low carbon generators to move onto fixed prices to end the situation where electricity prices are set by the marginal price of gas ensuring consumers pay a fair price for their energy.

With every good wish,

Jacob Rees Mogg

50 Comments

  1. DOM
    September 21, 2022

    ‘we are offering’. When he says ‘we’ he means ‘the taxpayer’ but this sneaky slight of hand is what we have now come to expect from party leaders who when in government abuse the private sector taxpayer to finance their respective parties (and allies) fortunes

    It will be UBI (Socialist bribery to encourage dependency and compliance) followed by digitalisation and ten it’s bye bye to the free world we once knew

    Reply
    1. Hope
      September 22, 2022

      Another pass the blame rather than we accept we failed over 12 years which has directly brought us to this mess. Yes successive Tory PMs aligned with EU idiocy because the Tory govt lost the ability to think independently and make decisions of its own.

      Gradually the Tory party is economically bringing the country to its knees.

      Reply
  2. glen cullen
    September 21, 2022

    Any which way you cut it; it’s a subsidy
    The energy suppliers are still getting the prices they want supported by the taxpayer
    What we need is a reform of the domestic and international energy markets
    Why are there so many differing tariffs on domestic supply
    Why are the tariffs different between the business consumer and the domestic consumer
    We’re papering over the cracks

    Reply
    1. Lifelogic
      September 21, 2022

      Indeed they the paper will soon tear again. This is the wrong solution as anyone sensible with any understanding of economics would tell you.

      Reply
    2. Mickey Taking
      September 21, 2022

      the energy suppliers don’t make their energy and offer it as self created. The government need to find a way to whittle down the suppliers and lean on them towards standardisation.

      Reply
      1. dixie
        September 23, 2022

        Octopus does generate it’s own energy – see Octopus Energy Generation.

        Reply
        1. Mickey Taking
          September 23, 2022

          do they all peddle a lot to generate electricity? Own the ghastly windmills?
          Put solar panels on the employees roofs?

          Reply
    3. Lynn Atkinson
      September 21, 2022

      They have to be subsidised between the cap and the market price, else they will sell on the open market.

      Reply
  3. Denis Cooper
    September 21, 2022

    So does “the delivery of comparable schemes in Northern Ireland” depend upon EU approval?

    Or are they separate schemes because they have to cleverly work around the swathes of EU laws which have been left in place for Northern ireland as the price for Boris Johnson’s pathetic little trade deal?

    When Liz Truss signed the Proclamation of Charles III, did she really agree with its claim that “the Crown of the United Kingdom of Great Britain and Northern Ireland” had “solely and rightfully come to him”?

    Is she sure that it’s all his, that Northern Ireland has not become a kind of “condominium”?

    Reply
  4. miami.mode
    September 21, 2022

    Doubtless the nation will leap with unbounded joy to learn that their taxes will ensure that Google, Amazon, BP, Shell, et al will not have to suffer a loss to their profits due to high energy prices. Evidently Kwasi Kwarteng is worried about them descending into bankruptcy.

    Reply
    1. IanT
      September 21, 2022

      80% of all employment in this country is via Small and Medium Enterprises (SME’s) – not Multinationals.
      Whatever the pros and cons of this scheme from their (SME) point of view, it does seem to have the advantage of simplicity – which means it can be done quickly. I used to run one of these small companies and the last thing they need right now is another ton of claim forms to fill in.

      Reply
      1. Lynn Atkinson
        September 21, 2022

        Absolutely right. Of course the ‘sanctions on our only energy supplier’ was not a bright move, but the political class will never accept the blame for their idiotic actions,

        Reply
      2. Bloke
        September 21, 2022

        Simple schemes are superior Ian. Complicated changes risk developing into tangled muddles.

        Reply
  5. Roy Grainger
    September 21, 2022

    Price controls are a communist policy, surprised to see Mogg Embracing them.

    These price controls will artificially reduce the calculated inflation rate and so reduce the amount of interest the government has to pay out on inflation-linked bonds, and triple-locked pensions. How do these savings stack up against the costs ?

    Reply
    1. IanT
      September 21, 2022

      And the alternative is Roy?

      Reply
  6. Bob Dixon
    September 21, 2022

    Lovely.
    Good old taxpayers coughing up again.

    We the taxpayers need to pay less tax.

    How about reversing George Osborn’s raid on dividends and Hammond pilling in as well.
    After tax dividends paid by companies are now taxed twice.
    Outragious.
    Conservatives you must be joking.

    Reply
    1. Ian Wragg
      September 21, 2022

      How did we get into a situation where windfarm owners can charge the highest tariff for their ‘cheap” energy then demand subsidies when prices are low and constraint payments when they overproduce.
      They should be paid the price they bid at.

      Reply
      1. glen cullen
        September 21, 2022

        I’d suggest that the market is rigged

        Reply
        1. Mickey Taking
          September 22, 2022

          Gosh! really? whoever would have thought it?

          Reply
      2. dixie
        September 23, 2022

        Didn’t the nuclear industry set the precedent for some of this?

        Reply
  7. Mark
    September 21, 2022

    There is still a lot of detail missing. Perhaps the first point to make is that these prices only refer to the wholesale cost of energy, and do not include the other charges that go to make up bills, including transmission and distribution charges and charges related to maximum demand levels etc. Real bills will be at rather higher prices.

    Kathryn Porter has done a remarkable job in providing a quickfire analysis of some of the wrinkles, including discussion of plans to replace contracts for renwables supply.

    https://watt-logic.com/2022/09/21/business-energy-support/

    Reply
    1. miami.mode
      September 22, 2022

      Two good points from that, Mark “My choice would be for a windfall tax on renewable generators that do not have active CfDs (some CfD holders have delayed the start of their contracts in order to benefit from current market prices) to be taxed on their excess profits from 1 January this year, in other words they keep the profits earned last year but cannot keep the higher excess profits received this year” and “I would also consider re-negotiating the ROs and moving generators from ROs to CfDs with an ongoing windfall tax for any that refuse”.

      It seems some renewable generators are of a modest size and their supersized profits have escaped scrutiny.

      Reply
      1. Mark
        September 22, 2022

        I am still chewing the cud on how best to proceed on pricing, not being convinced that government would negotiate new CFDs effectively or in the interests of consumers rather than windfarms. There is certainly no excuse for continued renewables subsidy, and there needs to be a proper reflection of the costs of intermittency they impose. Those costs increase when the cost of backup increases. They should be paying a chunk of the gas bill. There would be no need of windfall tax, and they would be competing on a much more even playing field. CFDs insulate from markets and competition.

        I have been looking back at how the gas market worked when we were self sufficient. Deals to provide highly flexible supply were premium priced, reflecting the economics of intermittency and the limited number of fields that could cope with it, but they were longer term deals, and the overall capacity was always adequate to meet demand, allowing for the effects of fuel switching and interruptible contracts. We were never close to blackouts or major industrial shutdowns. The real key is ensuring adequate competitive capacity.

        Reply
  8. Peter2
    September 21, 2022

    I’m grateful for this package of help for consumers and businesses.
    With Putin creating an current energy crisis by bringing forward by a few years shortages caused by net zero policies this short term action will help over the coming winter.
    Some call for a windfall tax but the main energy companies are not based in the UK for taxable purposes.
    Those that are placed here already taxed, some at 60%.
    If a windfall tax were to happen it might raise £10 billion
    The cost cost of this package of help is said to cost £150 billion.

    Reply
    1. hefner
      September 21, 2022

      Grateful for a £150 bn package relying on a Magic Money Tree type of economics? I am flabbergasted. Is that really you P2?
      Or I guess you will now explain me in details how this is not MMT. Thanks in advance.

      Reply
      1. Peter2
        September 21, 2022

        Are you flabbergasted heffy?
        Oh dear, never mind.
        One minute you are a big State magic money creation spend borrow and tax lefty and now when the Conservatives do policies you seem to agree with you get all aggressive.
        Make your mind up.
        Hilarious

        Reply
        1. hefner
          September 22, 2022

          So pleased to be able to bring a smile to your face in this little crumpled world of lefties vs right thinking people, remoaners vs leavers, Establishment vs hard-working people, scroungers vs strivers, skivers vs exporting businesspeople, …

          Reply
          1. Peter2
            September 22, 2022

            I love my personal troll heffy.

  9. The Prangwizard
    September 21, 2022

    Does this mean tbat the likes of Starbucks and MacDonalds etc., usually owned by massive US or other countries will get a fat handout.

    How many times have I said our governments, particularly the deceitfull Tories have sold our country to foreign buyers who must be laughing out loud.

    Reply
    1. Peter2
      September 21, 2022

      They employ tens of thousands of people and those jobs need protection in this emergency situation

      Reply
    2. Mickey Taking
      September 22, 2022

      They are mostly privately owned people who have to operate to the Corporate standard and order materials/food etc from the name on the shop (at a cost!).

      Reply
  10. a-tracy
    September 21, 2022

    Damned if you do provide business help, damned if you don’t.

    Brown is in the Guardian claiming the Tories aren’t doing enough for the poor relating to energy bills rising. “This is an average increase of £10 a week, on top of April’s rise of £14 a week.”
    How much per week do all the below add up to for the poor? Are there some I have missed or double-counted?
    What is the price of gas and electricity for an average three-bed semi or two-bed flat expected to be?

    * Households will all get £400 in October, discounted in instalments.
    * Households in England, council tax bands A-D have had £150 rebates made available by local authorities from April 2022, covering 80% of homes more targeted towards lower-income families.
    * gov.uk said Millions will receive £350 boost to help with rising energy costs, is this in addition to the two above?
    * £144 million has been provided to support vulnerable people and individuals on low incomes that don’t pay council tax or that pay council tax for properties in bands E-H.
    *Expansion of the Warm Homes Discount by almost a 3rd so that 3 million vulnerable households will now benefit, as well as the £10 uplift to £150 from October.
    *Cold weather £25 and Winter fuel payments £100 to £300 paid automatically.
    *provided an effective tax cut for those on UC – allowing 1.9 million households to keep an average of £1000 pa.
    *local welfare schemes might help with top-up vouchers; foodbanks also give out voucher top-ups if you’re on a pre-payment meter if you are referred. Who is putting the funds in to do that?

    Reply
  11. Donna
    September 21, 2022

    And all because we have an elitist generation of Eco idiots in the Establishment and Parliament who thought it was a great idea to make ourselves energy dependent on foreign supplies of gas, oil, coal and wood-chips and intermittent and unreliable “renewable” energy.

    Putin was only the catalyst. The crisis was home made, by Lib, Lab and CON.

    Reply
    1. glen cullen
      September 21, 2022

      Spot On Donna

      Reply
    2. Shirley M
      September 21, 2022

      +100 Donna

      Reply
    3. Lynn Atkinson
      September 21, 2022

      Putin did nothing – these same homegrown idiots put sanctions on our energy supplier. I don’t believe lifting them will now resolve the issue. The world demand is great and we turned our friend, Russia, into an enemy. Can’t blame them for no longer giving is priority.

      Reply
      1. anon
        September 21, 2022

        Russians are business people. Its also better to be friendly, why not. The sanctions were self-evidently stupid, an intelligent play would have been storage and diversification. Or just manage Russia security concerns constructively.

        A negotiated settlement will be needed with disputed regions needing to vote, perhaps for different options. Similar to Kosovo.

        We have the UN. Surely the UN needs to get involved. Indian & Chinese troops could monitor a ceasefire.

        Are we not sick of the destruction yet!

        The US mid-terms cant come soon enough. Maybe some impetus can come from that.

        Reply
        1. Mitchel
          September 22, 2022

          NATO is the armed wing of monopoly capital-it seeks monopoly for the dollar and it’s associated institutions.Alternatives not permitted and will be destroyed.Except the alternatives/competitors are now too powerful for NATO to destroy.

          Thucydides Trap.

          Reply
    4. IanT
      September 21, 2022

      Net Zero is very much like Brexit – it’s a cross-party dogma Donna.
      Rather like Brexit, the metropolitan elites cannot understand why anyone would object to Net Zero because their climate orthodoxy demands complete acceptance of anything that claims to reduce carbon emmissions. Even if a cursory examination of the resulting policies don’t make any practical sense (either economically or in terms of actually reducing carbon emmissions in absolute terms) we must still accept them.
      So it’s wrong to mine coal in UK but OK to import it. We burden our industry with green taxes but encourage imports from carbon intensive manufacturing countries. We are busy banning ICE cars and encouraging the manufacture of BEVs that require more carbon intensive manufacturing processes. We leave ourselves vunerable to Putin’s blackmail because no one thought energy security mattered anymore. After all, we could always import other peoples energy (at least as long as they had some spare)
      Worst of all, we allow the sleight of hand of carbon credits. A disciple of Gaia can fly their private jet around the world (to attend their climate emergancy meetings) because they can afford to have some trees planted to offset their sins, a modern version of Indulgence.
      In other words, don’t do as I do (as it’s deeply immoral but also because you can’t afford the eco-penance!) required.

      Reply
  12. X-Tory
    September 21, 2022

    “We will introduce a Bill immediately after Parliamentary Recess…..It will provide powers to enable low carbon generators to move onto fixed prices to end the situation where electricity prices are set by the marginal price of gas ..”. Completely MENTAL. We don’t want to “enable” them to move onto fixed prices, we want to OBLIGE them to do so!!! Merely enabling them to do so leaves them the option of refusing. They should just be moved onto fixed prices with IMMEDIATE effect, whether they like it or not.

    And then the obvious question is: ‘WHAT will the fixed price be?’ Knowing how weak and pathetic Truss is (still not triggered article 16, have you love?) it will no doubt be MUCH too generous. So more taxpayer money down the drain. Hey ho, thank goodness we’ve got plenty of government money to spare. Oh, hang on …

    Reply
  13. acorn
    September 21, 2022

    “It will provide powers to enable low carbon generators to move onto fixed prices to end the situation where electricity prices are set by the marginal price of gas ensuring consumers pay a fair price for their energy.”

    JR. Will this mean the older players making a bundle, running on ROCs, get a CfD / fixed price offer they can’t refuse; Mafia style? No mention of the network on-costs plus VAT (daily service charge) which is circa £900 a year for the Ofgem standard residential customer.

    It sounds like JRM is going for “dual pricing”. If I remember correctly, under the Trade and Cooperation Agreement with the EU, that is not allowed.

    Reply
    1. Peter2
      September 21, 2022

      Recently you claimed that the energy market was a free market acorn
      Now you say the opposite.
      Which is it?

      Reply
      1. acorn
        September 22, 2022

        Like all “free markets” they are free to maximise the consumption of government giveaways.

        Reply
        1. Peter2
          September 22, 2022

          What a ridiculous argument acorn
          You can’t claim the energy market is a free market and then say the next day it has huge subsidies and payments from the State and complain about it.
          PS
          £800 million last year paid to Drax to burn wood pellets which are hilariously defined as zero CO2

          Reply
  14. Dave Andrews
    September 21, 2022

    One question I would ask which no one seems to be addressing.
    What reason do the wholesale energy companies have to sell competitively to the retail energy business, when the difference between what they charge and retail price is made up by government subsidy?
    It seems to me the energy companies can charge what they like, and the government will pay. No need for the retail energy companies to shop around.
    Conservative values of competition flushed down the toilet.

    Reply
    1. Mark
      September 23, 2022

      I did give a detailed response which has evidently been regarded as too lengthy. The short summary is that, aside from protected renewables and tax and subsidy distortions, competition mostly applies when demand is less than potential real supply, but when supply becomes scarce prices balloon until demand drops back.

      Reply
  15. paul
    September 21, 2022

    I said a few weeks ago, one meter one vote, 150 billion would ofpaid for a 50% stake in UK energy on the market apart from the three biggest ones.
    Never see that money again and that just one year of many to come.

    Reply
    1. rose
      September 22, 2022

      £150 billion would also replace the Victorian sewers to take account of the unnaturally increased population.

      Reply
  16. Mark
    September 22, 2022

    So long as demand is below effective capacity the incentive is that over-pricing means that a generator risks not being able to sell at all, and thus missing out on profitable business. There is a lot of work in the words “demand” and “effective capacity”. Demand can include export demand on interconnectors which can become price setters themselves, and customers who are exposed to half hourly pricing (mainly large industrial ones) may drop out if power is too expensive – some may be able to generate more cheaply for themselves, while others simply shut down. Effective capacity includes only available renewables generation and other plant available to run (I.e. not in maintenance or mothballs), further modified to account for transmission constraints that typically apply to Scottish wind that must be curtailed and replaced by alternative generation further South. It can also be limited by the need to warm up plant before it is available for use: plant is kept on standby as spinning reserve to guard against an upset on the grid. Most frequently such upsets have been due to the sudden loss of an interconnector, but other trips do occur such as those that led to the blackouts in August 2019.

    However, there are times when the reserve margin gets eroded and there is no real competition to provide backup. In those circumstances any available plant or interconnector is in a position to charge more or less what it likes, limited only by what buyers will pay. Two winters ago we saw the first Electricity Margin Notices and huge price spikes as coal was cranked into use, with many more over last winter. At least then we were able to bid to import on every interconnector at capacity to meet demand during Dunkelflaute as well as pressing every available generator into service.

    Since then we have shut down 2 nuclear stations and 3 coal ones, and the situation on the Continent has changed radically because of power station closures and non availability of French nuclear. If you look at the price chart in the Watt-Logic article I linked above you will see that summer prices for baseload power are about double the gas prices which is a competitive level, with a relatively small premium for peakload largely reflecting extra costs of intermittent operation. However, winter prices reflect expectations of frequent shortage pricing, particularly for peakload, but even for baseload, depending on when the wind blows.

    There is in fact a cap on the subsidy the government will pay for businesses, so if prices extend higher, the extra will be passed on. There is still no clarity about handling real shortages which will entail rationing.

    Reply
  17. Lynn Atkinson
    September 22, 2022

    So the Govt takes emergency action to mitigate massive, unaffordable energy costs at the same time as the Bank of England raises interest rates 7 times within a month at the very same time as forecasting a recession! Of course the massive Bank margins will be maintained.
    Madness.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *