The new Energy Bill Relief Scheme will provide a discount on wholesale gas and electricity prices for all UK businesses.
The level of price reduction for each business will vary depending on their contract type and circumstances, and will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts.
The scheme will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six- month period.
Welcoming the move, Kate Jennings, Director of Policy at Logistics UK, said: “Rising energy prices are a great concern to businesses across the logistics industry, which is already operating on low profit margins.
"Figures from the latest edition of Logistics UK’s Manager’s Guide to Distribution Costs show that total vehicle operating costs have increased by 16.7% in the six months to 1 July 2022, as fuel, insurance premiums, business overheads and maintenance costs – such as tyres – have all increased.
“With operators also facing further costs as they look to decarbonise their fleets – and with many road operators transitioning to electric vehicles – Logistics UK is keen to work with government to explore what further support will be needed beyond the six-month period.”
The RHA said the scheme will provide much-needed help to road transport businesses across the country who are struggling with energy costs on top of escalating fuel prices, combined with increasing wage and vehicle costs. Without Government support, it said, many face going out of business.
Richard Smith, RHA Managing Director, said: “We welcome this measure which gives much-needed help to road transport businesses – the majority of which operate on low margins. As this support is in place for six months and prices are likely to remain high for many months, the industry will need support for a longer period to protect our supply chains.
“The announcement of a review on future support beyond six months is much needed, and we will be engaging closely with Government to ensure support is extended for the industry.”
Tim Morris, CEO of the UK Major Ports Group, said: “Ports – the gateways for 95% of UK trade – have seen energy price rises of around 350% already. So today’s announcement of an energy price cap scheme for businesses is welcome. However, there are further cost increases to come beyond the six month initial duration of the scheme as energy price fixes expire and are replaced.
"So it’s really important that cost mitigation measures are considered beyond the announced six month period. This is particularly important given the increasing electrification of ports as a key part of their journey to net zero emissions. We will be engaging with the Government to make the case for ports.”
The United Kingdom Warehousing Association, which represents warehousing and logistics providers as well as manufacturers, retailers and wholesalers, also welcomed the new scheme but said costs are still likely to be higher than a year ago and the easement is only guaranteed for six-months, offering small comfort in the longer term.
The Government must do more to support businesses essential to UK’s critical supply chains to adopt alternative energy solutions such as solar PV, the business group added (see here for more information).
Further information about the Energy Bill Relief Scheme is available here