The energy crisis means that as the price of wholesale commercial energy hits an unprecedented high, businesses must pay notably more for their energy bills.
As businesses reopened after the coronavirus pandemic, this created a surge in demand for business energy, although this clashed with the termination of Russian energy supplies as a result of the Ukraine war which ultimately led to a global energy shortage.
The cost of running a business is also rising exponentially as the government look at new ways of taxing businesses to pay for Covid-19 loans and grants distributed during the pandemic. Material shortages and supply chain delays triggered by the pandemic also mean that it now costs more to replenish stock and operate a business.
As energy prices hit an all-time high and the energy crisis places pressure on already strained company finances as a result of the pandemic, businesses must understand what support is available to them.
Rising business energy bills – what help is available?
The energy sector is enduring a catastrophic turn of events as the price of wholesale energy jumps to an all-time high due to supply shortages.
Energy Price Relief Scheme – To prevent businesses from falling into financial difficulty as a result of rising energy bills, a temporary ‘price cap’ has been announced for non-domestic customers under the Energy Price Relief Scheme. The government will provide a discount on gas and electricity unit prices throughout the winter, establishing a baseline ‘government supported price’ which is lower than currently expected wholesale prices this winter.
Cut down on usage – If you can cut down on energy usage by operating more efficiently, you can reduce your energy bills. Make small changes to your routine, from switching off monitors when they are not required or closing counters when footfall is typically low, to large changes, such as scrapping additional lighting or streamlining the variety of technology that you use.
Payment plans – If you are struggling to keep on top of your electricity payments, ask your energy supplier for more time to pay or you can spread your payments by entering a payment plan. Although this may not be widely advertised, energy suppliers may likely extend such flexibility to provide a helping hand to businesses during the energy crisis. Through a payment plan, businesses can get back on track with their payments and suppliers are more likely to get paid.
Alternative provider – Although market competition is currently stagnant, keep your eye on the radar to spot any alternative providers that may offer a cheaper or cost-effective solution. While market conditions are currently unprecedented, your options may be limited, although set an alert to receive notifications when a new provider with competitive prices enters the market.
How businesses can survive the energy crisis
To maintain a sustainable business model, businesses may have no choice but to raise their prices and reduce their offering, or otherwise risk falling into decline. If the business is already showing signs of financial distress, support from a company restructuring expert is vital to replenish company cash flow, restructuring debts and settling the score with outstanding creditors. If there’s no future in sight for the business as no level of support could revive it, a formal company closure route can help bring the business to a close.
Jon Munnery is a highly experienced restructuring and company liquidation expert at UK Liquidators, part of Begbies Traynor Group.
Support for businesses during the energy crisis