How are energy prices affecting businesses?
The ongoing energy crisis shows no sign of abating, with the war in Ukraine still with no end in sight. Although the summer months have offered some reprieve, the prospect of winter is now looming. Many businesses have already expressed fears about meeting another year of escalating energy bills without the certainty of further government support.
What has caused energy bills to rise?
Wholesale gas prices have rocketed over the past two years, driven by geopolitical factors and markets. As a result, Ofgem raised the energy cap to £1,370 in October 2021 from £1,223. By 2022, the cap was raised to £1,900. The cap is reviewed every six months.
The rising cap forced many smaller energy businesses out of operation, as they couldn’t transfer over the costs. This means customers ultimately ended up paying for wholesale increases alongside energy market failures and bailouts.
Nearly 4.5 million homes were experiencing fuel poverty by the end of 2021, with businesses closing because they can’t handle the rising costs. The businesses and industries most affected are those operating as factories, in the food industry, hoteliers, and heavy industry. When these businesses go bankrupt, supplier businesses are also affected.
What are businesses doing?
Tewkesbury business coach advisors are working with their clients’ businesses to offer advice and recommendations. These include measures such as:
– Fitting a smart meter.
– Working with suppliers to get onto a better contract.
– Looking for tax breaks.
– Finding ways to keep energy bills low.
If your business is affected, contact a Tewkesbury business coach to see how they can help.
What will the government do?
The government hasn’t confirmed any help with energy bills for businesses. The hope is that there will be a better winter without the same energy price fluctuations this year, but businesses are not only struggling with bills that are far higher than usual but also in the middle of a cost of living crisis. There is no doubt that it is economically tough to be running a business at the moment, especially one with physical premises and heating needs.