Capping prices for all businesses is ‘waste of taxpayers’ money’

The government’s support package for non-domestic energy customers has been criticised as a “waste of taxpayers’ money” by the chair of the Business, Energy and Industrial Strategy (BEIS) Committee.

Labour MP Darren Jones was speaking following the announcement on Wednesday morning (21 September) that non-domestic energy customers will see unit rates for electricity and gas slashed over the next six months.

BEIS said its Energy Bill Relief Scheme will provide a discount on wholesale electricity and gas prices for businesses, public sector organisations and charities.

It will target a “supported wholesale price”, expected to be £211/MWh for electricity and £75/MWh for gas. Ministers said these rates are less than half of the wholesale prices expected this winter and represent equivalent levels of support to the recently announced Energy Price Guarantee for households.

In response to the plans, Jones questioned the universal nature of the support and said: “Capping the price for all businesses is a waste of taxpayers’ money, which should be targeted at those which need it the most.

“Why should British taxpayers collectively get into even more debt to hand over public funds to Amazon?”

Jess Ralston, senior analyst at the Energy and Climate Intelligence Unit (ECIU), questioned what would happen once the six-month support period is over.

She added: “Experts have said time and time again that the government’s approach to the gas crisis is missing a key component – conserving energy.

“While billions will be spent on bailing out bills, much less is targeted at the root of the problem, that we waste huge amounts of our energy.”

Yet others were more positive about the news, with Eon UK boss Michael Lewis saying it would be “welcome immediate relief for many organisations across the UK”.

However, he said, there is still a lot of detail to be established and there also needs to be a longer-term view.

He continued: “Unlike households, these measures are only in place for the next six months, although the government has said it will assess specific support for ‘vulnerable businesses’ after that time period.

“We will continue to work with the government to provide a longer-term perspective and to ensure that our business customers get the help they need.”

Lewis also spoke about the importance of energy efficiency as part of the UK’s longer-term net zero ambitions.

He added: “There is a real need to accelerate energy efficiency initiatives, whether that is through targeted incentives or extending schemes that provide tax breaks for installing more efficient equipment. While short term support is undoubtedly needed, we can’t afford to lose sight of the long-term net zero goal.”

Similarly the Association for Renewable Energy and Clean Technology (REA) welcomed the support, but it too raised concerns about the lack of movement on energy efficiency.

It warned that capping prices may dampen signals to reward those who reduce their energy demands and switch to decarbonised energy solutions.

REA chief executive Nina Skorupska said that in the medium term “a lot more must urgently be done” to avoid a similar situation once the initial six months of support ends.

She added: “We cannot be in the same position next winter. The renewables industry is already in discussion with government to determine how the much cheaper costs of low carbon generation can be better felt within the wholesale market and benefit both domestic and non-domestic energy users.

“We have all the solutions available to us to encourage the mass rollout of low carbon heat technologies…it is vital that government recognise the need to ensure the right technology for the right commercial and industrial situation.”

Dan Alchin, director of regulation at trade body Energy UK, said: “Energy UK welcomes support from government to help business customers with energy bills this winter with the new Energy Relief Scheme announced today.

“Business energy suppliers will continue to work closely with government to ensure that the scheme reaches all businesses, charities and public sector organisations this winter.”

The cost-of-living crisis will be discussed in more detail at the Utility Week Forum in November. For more information and to book your place click here.