Understanding the energy price cap: What you need to know as a small business owner!

As a small business owner, it's important for your growth to stay informed about energy costs and how they affect you. One common topic that often comes up is the energy price cap. But what does it mean for your business? Here’s everything you need to know:

What is the energy price cap?

The energy price cap is a measure set by Ofgem, the regulator for the electricity and gas markets in the UK. It ensures that domestic customers don’t pay unfairly high prices for their energy bills. Ofgem reviews the price cap every three months to reflect current market conditions, adjusting the maximum amount suppliers can charge for energy.

However, this cap only applies to domestic customers and does not impact small businesses.

So, does the price cap affect small businesses?

The short answer is no, small businesses are not covered by the energy price cap. The cap only limits how much energy suppliers can charge for each unit of gas and electricity used by households, as well as the daily standing charge for grid connection.

Why don’t small businesses have a price cap?

Unlike households, small businesses have unique energy needs that vary from one to the next. Each business has its own usage patterns and requirements, which is why there isn’t a fixed price cap. This flexibility allows energy suppliers to offer competitive rates tailored to the specific needs of small businesses.

What protection is in place for small businesses?

Even though there is no price cap for small businesses, there are still protections in place to ensure fair treatment:

1. Market competition: Business energy rates are determined by the market, meaning suppliers compete to offer the best prices. This encourages businesses to shop around and find the best deals.
2. Regulatory safeguards: Ofgem oversees the energy market for businesses to ensure suppliers are transparent and treat all customers fairly. The Non-Domestic market review (NDMR), for example, ensures that suppliers disclose any commissions or fees and provide fair terms to businesses.
3. Government support: During periods of high energy prices, the government may introduce schemes to support small businesses. For instance, the Energy Bill Relief Scheme (EBRS) helped businesses during the energy crisis. Always stay updated on new grants or government schemes designed to assist small businesses.

What happens when wholesale prices rise?

In times of rising energy costs, small businesses might feel the impact, but there are steps you can take to manage the situation:

• Check for Government Support: keep an eye out for new grants or relief schemes that could offer financial help.
• Adopt energy saving practices: implement energy-saving tips to reduce overall consumption, such as upgrading to energy-efficient equipment or improving insulation to reduce costs.
• Consider fixed tariffs: Locking in a fixed energy rate with your supplier can protect you from fluctuating prices. Find out how to find the right tariff for your business.

How is small business energy regulated?

To ensure small businesses are treated fairly, Ofgem enforces strict regulations, such as the Non-Domestic Market Review (NDMR). The NDMR focuses on:

• Transparency: suppliers must be clear about their pricing and any third-party commissions they might charge.
• Fair treatment: Ofgem ensures suppliers offer fair terms, including flexible payment plans and competitive rates.
• Support & Resources: suppliers are required to refer businesses to resources like the Citizens Advice Bureau for additional support.
• Complaint handling: suppliers must have systems in place to handle and resolve complaints promptly.

How to keep your energy costs in check

If you're concerned about rising energy costs or want to make sure you’re on the best tariff for your business, here are a few tips:

• Review your energy tariff: regularly compare energy prices across the market. It only takes a minute to check our small business tariffs, and we recommend doing so to ensure you’re getting the best deal.
• Submit accurate meter readings: to avoid paying more than you need to, always take regular meter readings. This ensures you’re only paying for the energy you actually use. Even better get your smart meter to send automated ones.
• Seek expert advice: our energy specialists are always available to help answer any questions or offer guidance on managing your business's energy consumption.

Final thoughts

While the energy price cap doesn’t apply to small businesses, there are still many ways to protect yourself from rising costs. Stay informed about available government schemes, shop around for the best rates, and be proactive in implementing energy-saving practices.

You can compare EDF small business tariffs in just 60 seconds. Remember, our dedicated energy specialists are always here to support you and answer any questions you may have.

If you're ever worried about your bills, please don't hesitate to visit our website. We offer support on managing debt and provide tips on reducing your energy costs.  It's also important to regularly take meter readings to ensure your bills are accurate and you're only paying for the energy you use, its quick and easy to do via your MyAccount. Make sure you’re always on the right tariff for your business. We recommend you review prices across the market.