Support for farm businesses for energy bills – What you need to know

By Andrew Heskin, Partner and ARA specialist

A package that will see UK businesses, including farms and rural enterprises, having their gas and electricity costs cut by around half their expected level is now underway.

The scheme has seen prices set at 21p/kWh for electricity and 7.5p/kWh for gas for businesses in England, Wales and Scotland from 1 October and will remain in place until 31 March 2023.

These supported energy rates compare with previous wholesale estimates this winter of 60p/kWh for electricity and 18p/kWh for gas.

The support package is applied to fixed-price contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts.

Provided that the wholesale element of the price a business customer is paying is above the new Government price, businesses on fixed-price contracts will see their per unit energy costs automatically reduced by the relevant p/kWh for the duration of the scheme.

Meanwhile, businesses on default, deemed or variable tariffs will receive a per-unit discount on their energy costs of up to a maximum of the difference between the supported price and the average expected wholesale price.

The amount of this maximum discount is likely to be around 40p/kWh for electricity and 11.5p/kWh for gas. The maximum discount will also apply to businesses on flexible purchase contracts.

There are concerns that when the support ends next year, businesses could be left in the lurch, particularly energy-intensive farm businesses, such as in the dairy sector, which are already facing increased borrowing.

Are you struggling with the costs of running your farm business? Speak to our team today for advice.