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How Does The Energy Cap Rise Affect Your Business?

When the energy price cap was first implemented in 2019, it capped the rates that energy companies could charge their residential customers on their standard variable rate tariffs (SVTs).

However, there is no limit on the cost of energy that may be charged to businesses. This allows suppliers to raise prices as much as they need to in order to recover their expenses. As a result, the average out-of-contract rate has increased by 100% during the last year.

If a business allows its fixed rate agreement to lapse without negotiating a new one, it might face significant rate increases despite the fact that its energy use has remained the same. The only option to prevent these price increases is to switch to a new business energy plan. So make sure to check when your plan expires so you can negotiate a new one to avoid any shocks.

What if you’re a home-based business owner?

There are two ways the cap will affect those who operate their small businesses out of their homes without switching to a business energy deal:

  • If you’re on a regular variable rate tariff, your rates will rise by no more than the maximum allowed increase.
  • Because of the rise in the fixed-rate plans that your supplier offers, you may feel the squeeze the next time you switch energy providers.

It seems to reason that, especially in the colder months, the energy consumption of a home-based business will be higher and in addition, your monthly household energy costs will increase proportionally with your increased use of both gas and electricity.

If you don’t run your business out of your home but rather have a shop or restaurant, for example, you won’t be protected by price caps. Even though you have negotiated a custom gas and electricity deal for your business, your commercial supplier may raise your rates at renewal in order to cover rising costs.

We hope this has covered what the energy cap rise means for businesses, and if you’re feeling the pinch in your business, don’t fret! There are plenty of things you can do to help with cashflow and keep your business moving in the right direction. Speak with one of the team at hello@bkplus.co.uk or complete the contact form below – we’ll support you through this.

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