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Government Energy Policy Announcement

Following yesterday’s government announcement on actions to mitigate the effects of the energy crisis, TEC have been reviewing various statements in an attempt to assess the impact on our members.

At this stage details in relation to businesses, charities and public sector have not been announced. It is understood from the announcement that it will be equivalent to the policies for domestic consumers – the domestic tariff will be capped at £2,500 for the average consumer*. Support for businesses will initially be in place for six months through this winter, with the support being reviewed every three months thereafter. There is speculation over the types of businesses and contracts that will be covered, but this is unclear at this time.

An extract from the Cabinet Office’s press release follows, with an important segment highlighted:

“As businesses have not benefited from an energy price cap and are not always able to fix their energy price through fixed deals, many are reporting projected increases in energy costs of more than 500%. A new six-month scheme for businesses and other non-domestic energy users (including charities and public sector organisations like schools) will offer equivalent support as is being provided for consumers. This will protect them from soaring energy costs and provide them with the certainty they need to plan their business. After this initial six-month scheme, the Government will provide ongoing, focused support for vulnerable industries. There will be a review in 3 months’ time to consider where this should be targeted to make sure those most in need get support. The Government will provide energy suppliers with the difference between this new lower price, and what energy retailers would charge their customers were this not in place. Schemes previously funded by green levies will also continue to be funded by the Government during this two year period to ensure the UK’s investment in home-grown, secure renewable technologies continues.”

Further details are expected to be provided by the Chancellor, Kwasi Kwarteng, next week. We will review this information when available, we continue to work with our Framework suppliers and will provide further detailed information to the membership when it becomes available.

* – The cap on domestic tariffs is not an absolute cap, it is a cap on the unit rate of energy. This means that any steps taken to reduce consumption will reduce the price paid by domestic consumers.


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