The UK's domestic energy price cap is set to rise by 3% in April 2025, increasing from £1,738 to £1,785 annually for the average household. This adjustment, influenced by persistent high wholesale energy prices and geopolitical uncertainties, directly impacts households but could also have a huge impact on your business.
Understanding the Domestic Energy Price Cap
The energy price cap limits the maximum amount suppliers can charge domestic customers on standard variable tariffs. It's reviewed quarterly to reflect changes in wholesale energy costs. This means that if wholesale prices are rising, businesses can also expect their energy prices to go up.
Implications for Businesses
Although businesses aren't directly subject to the domestic price cap, its fluctuations can indirectly affect them in several ways:
- Pricing trends: The domestic price cap shows a trend for overall energy market conditions. An increase suggests rising wholesale energy costs, which can lead to higher prices for business energy contracts. Businesses should monitor these trends to anticipate potential cost increases.
- Supply chain costs: As households face higher energy bills, disposable income may decrease, potentially reducing consumer spending. This can affect businesses, especially those in retail and hospitality, as they may experience a decline in sales, impacting their revenue and profitability
- Operational expenses: Energy-intensive industries may face increased operational costs due to rising wholesale prices. Without a price cap, businesses are more exposed to market volatility, making it essential to secure favorable energy contracts to manage expenses.
Strategies for businesses
To mitigate the impact of rising energy costs, businesses can consider the following strategies:
- Energy efficiency measures: Investing in energy-efficient equipment, such as solar panels and voltage optimisers can reduce consumption, lowering overall energy expenses.
- Fixed-rate contracts: Exploring fixed-rate energy contracts can provide budget certainty, shielding businesses from market fluctuations.
- Market monitoring: Regularly reviewing energy market trends and consulting with energy advisors can help businesses make informed decisions about their energy procurement strategies.
In conclusion, while the domestic energy price cap doesn't directly apply to businesses, its increase reflects broader market trends that can indirectly influence business operations and costs. By staying informed and proactive, businesses can navigate these challenges and maintain financial stability.
If you're looking to save money on your energy bills then why not get in touch today? The relationships Resolve Energy has developed with over 24 of the UK’s biggest business energy suppliers allows our energy experts to source the best business energy rates available for your company right when you need them. Request a free quote today and start saving money on your energy.
