Rising energy costs in the pipeline

Energy policies are adding less than 1% to businesses’ overall operating costs, the government has claimed.

The government published its Estimated Impacts of Energy and Climate Change Policies on Energy Prices and Bills report on 6 November. It said that energy costs for medium-sized businesses were on average around 28% higher in 2014 as a result of government policies. By 2020 the report predicted that energy policies would add £450,000 (33%) to the average bill, which would stand at £1.8mn overall.

Given that small-sized businesses do not participate in the Carbon Reduction Commitment (CRC) energy efficiency scheme, the overall impact of policies on bills is lower than for medium-sized business. In 2014, energy bills for small businesses were about £8,000 (11%) higher as a consequence of policies, standing at £79,000 in total. By 2020, it was expected that bills for these users would average £89,000, 16% (£13,000) higher than would have been the case without policies. But the report said that energy formed a low proportion of overall costs for the business sector– averaging 3% ¬– and that the increase of 28% in 2014 represented only around a 1% increase in total operating costs.