David Equi can’t take a break. He opened a gleaming new factory in Glasgow for his eponymous luxury ice cream business on the eve of the coronavirus pandemic, and has now missed the cut in government energy support by a day.
Faced with soaring energy costs, he plans to shut down his blast freezer this winter – a container that quickly cools 40 pallets of ice cream. “We turn that off and use our existing freezers just to save money, and turn it back on in the summer. We just look at the smaller things where we can save.
Equi is also considering closing the factory entirely for up to three weeks over Christmas to save on bills, rather than operating with reduced staff as usual at the business, which supplies Aldi customers at the hotel. Gleneagles.
Many businesses will have invested in long-term sustainability measures to become more energy efficient, but now, in the face of rising prices, businesses of all sizes across the country are looking at all available measures to reduce their bills.
Electricity retailer Currys plans to dim its TVs; Vivendi, owner of the advertising agency Havas, lowers the temperature in its offices by 1°C; and 300,000 LED lights will illuminate Oxford Street this Christmas – cheaper and more efficient than standard bulbs.
The incentive is clear: the group of restaurants and pubs Mitchells & Butlers said late last month that its energy bill had nearly doubled to £150million on pre-pandemic costs. Alston Wholefoods, a village store in Cumbria, has switched off its freezer and instead uses laminated images of produce that customers can order, saving around £3,000 on its annual bill.
Some small businesses are worried that the government will ask them to close this winter to save energy. Others say the sudden rise in costs has left them struggling to survive.
Bev Lee runs a bistro in Aberdeen offering afternoon teas and a corporate catering service. Faced with her energy bill doubling to nearly £3,000, she took action. There’s the new double glazed front door, pressure cooker, infrared heaters and air fryer for energy efficiency; she consolidated her storage space so the fridge door wouldn’t be opened regularly and turned off the string lights that passers-by noticed.
Lee takes meter readings morning and evening. She even moves slower, driving at a top speed of 50 mph to keep fuel costs down. Basically, it’s closed for walk-in customers, only opening for reservations, to keep energy costs under control. “I’m just determined to have all the ingredients in place to get through this winter. When it’s your business, you do what it takes to survive.
At the end of September, the government announced the Energy Bill Relief Programme, a six-month support measure for businesses, charities and public sector organisations. It could cost up to £48 billion.
Officials have set a standard discount – expected to be £211 per megawatt-hour (MWh) for electricity and £75/MWh for gas – for non-domestic customers on fixed contracts, which the government says will would be “equivalent” to the support granted to households.
The support will be retrospectively applied to invoices from October 1st as it is still in launch mode. Companies had to have signed their last energy deal after April 1 – or sign contracts before next April – to become eligible. Critics have argued that gas prices began to rise rapidly last fall and spiked after Russia invaded Ukraine in late February, making April a disconcerting starting point.
Equi signed a new contract on March 31, although it only started in May. “It’s incredibly frustrating because it’s just an arbitrary date,” he says. His case was taken up by MP Margaret Ferrier, who asked the Chancellor, Kwasi Kwarteng, to review the Commons support deadline just after his mini budget and hours before he was to attend a champagne party with financiers.
He is far from alone. Lee signed an 18-month fixed-term contract in February, missing the support threshold by just a few weeks. “It hurts to know that I don’t get any support from the government… [but] in a realistic world, any support the government gives us, eventually we have to pay it back in the form of higher taxes,” she says.
Businesses are also confused and frustrated about exactly how much support will lower their bills. The Truss administration has spoken of a halving of energy bills for businesses, but analysis from leading consultancy Cornwall Insight shows it expects the rebate to be between 25% and 40%, depending on their contract.
The difference between this support scheme and the one for households is that a set of fixed costs will remain for professional customers: they include the metering and network costs of suppliers and the cost of credit reflecting the commercial risk of non-payment. client.
For those with a variable rate, a maximum discount will be applied. On September 21, the government said it would be “probably around £405 per MWh for electricity and £115 per MWh for gas”. However, guidance released earlier this month shows the maximum rebate has now been reduced to £345/MWh for electricity and £91/MWh for gas, which could add to the confusion. “It’s such a complex plan; there have been so many questions from suppliers,” says a source close to the government-industry talks.
“Some providers said they would be able to implement it quickly, others say they don’t have the granular data on their customers to calculate discounts, but the government said they couldn’t. not have different rules for different providers,” he adds. “Providers are also reluctant to pass on the rebate until there is legislation, so there is confusion as to when the program will actually start. is not as generous as the cleaning fee and may not have a massive impact.