In 2023, energy prices have stabilized following significant volatility in 2022. Nevertheless, prices remain twice as high as they were at the beginning of 2021. To provide context, energy prices have surged by approximately 100% during this period, whereas the inflation rate has only been around 11%.
For households, a price cap has been in effect since 2019. However, there is no equivalent cap for businesses. Instead, the government introduced two discount schemes. The first, the Energy Bill Relief Scheme, ran for six months from October 1, 2022, and was succeeded by the Energy Bills Discount Scheme on April 1, 2023, which will continue until March 31, 2024. It's important to note that funding for the latter scheme was significantly reduced, and prices have not surpassed the required threshold since December 18, 2022.
As a business owner or householder, two key considerations arise:
The energy price cap for households will increase by £94 from January 1, 2024, rising from £1,834 to £1,928 annually. However, it's crucial to understand that only unit rates are capped, not the final bill. If your energy usage exceeds the average household, your costs may surpass the capped level.
Business energy is not subject to a price cap, and while rates may be decreasing, government support has been notably reduced since April 1. Business energy prices respond to the live market and fluctuate weekly. Despite a 50% decrease in rates since October, predicting or guaranteeing future price changes is challenging.
Ofgem has indicated that "in the medium term, we're unlikely to see prices return to the levels we saw before the energy crisis." Therefore, securing your rates today can provide protection against market volatility.
Kommentare