Support scheme to halve energy bills for UK farm businesses

UK businesses, including farms and rural enterprises, will have gas and electricity costs cut by around half their expected level this winter under a six-month scheme set out by the government to tackle unsustainable energy prices.

Through a major support package announced on Wednesday (21 September), the government will provide a discount on wholesale gas and electricity prices for businesses in Great Britain and Northern Ireland.

The scheme will initially run from 1 October to 31 March 2023, though this has raised concerns for farm businesses needing to plan much longer-term.

See also: Farm businesses facing energy bills increase of up to 400%

For businesses in England, Wales and Scotland, the prices are expected to be 21p/kWh for electricity and 7.5p/kWh for gas.

These compare with wholesale estimates this winter of 60p/kWh for electricity and 18p/kWh for gas.

The support package will apply to fixed-price contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts.

Automatic cuts

For businesses on fixed-price contracts, provided that the wholesale element of the price the customer is paying is above the new government price, their per unit energy costs will automatically be reduced by the relevant p/kWh for the duration of the scheme.

Those on default, deemed or variable tariffs will receive a per-unit discount on energy costs, up to a maximum of the difference between the supported price and the average expected wholesale price over the period of the scheme.

The amount of this maximum discount is likely to be around 40p/hWh for electricity and 11.5p/kWh for gas.

This maximum discount will also apply to businesses on flexible purchase contracts.

A comparable scheme, based on the same criteria and offering similar support, will be created for Northern Ireland.

Industry reaction

The government said the support will apply to energy usage from 1 October to 31 March 2023. Support beyond this has not yet been set out.

This has raised concern for energy-intensive farm businesses already facing increased borrowing, such as in the dairy sector, that need to provide longer-term plans to their bank.

The Association of Independent Meat Suppliers (Aims) said the support would “help to calm the nerves of some businesses”, but its members needed more reassurance.

“It is essential for their business planning that the government provides further details as to what will happen to energy bills from 1 April 2023 as soon as they are able to,” said Aims spokesman Tony Goodger.