November Budget: How does it impact energy bills?
As far as energy is concerned, the Autumn Budget landed with a clear political priority: easing pressure on household bills. For business users, the story is more nuanced, with a subtle, yet important shift in how government thinks about policy costs on bills, against a changing backdrop of non-commodity charges that continue to shape what businesses ultimately pay.
Here’s what was announced, what it could signal next, and what to watch if you’re planning budgets, renewals or decarbonisation projects.
A shift in how energy levies are funded
For the very largest businesses, there was an announcement prior to the budget that introduced a new scheme called theBritish Industrial Competitive Scheme.
This will reduce energy costs for around 7,000 of the highest electricity users by exempting them from the costs of the Renewables Obligation (RO), Feed-in Tariff (FIT) and the Capacity Market (CM) subsidies, estimated to be worth a total of £35-£40/MWh.
There are changes in how levies are paid in household bills too. The end of the Energy Company Obligation (ECO), and the part-funding of the Renewables Obligation (RO) by the Treasury, will remove around £150 per year from domestic bills.
These changes might not impact most businesses energy bills directly. However, they mark a shift in the Treasury’s appetite for bringing levy costs into general government spending, where they can be funded more progressively by the taxpayer, and not the billpayer.
A more explicit reference to that possibility could be found in the accompanying fine print.
The government reiterated their focus on bringing down energy bills for households and businesses, and ‘will subject any additional costs, including new levies, to enhanced scrutiny under a new framework to ensure they… do not impose unnecessary costs on [energy users].’
We think this is incredibly important. Good Energy has long advocated for the removal of levies from bills, specifically when doing so can help reduce electricity costs relative to gas. This encourages homeowners and businesses to electrify their heating and transport and consequently reduce their total energy emissions. We will continue to push the government on this issue, especially at a time when non-commodity costs threaten to rise in the form of increased transmission system charges and a new ‘Regulated Asset Base’ levy to fund new nuclear site, Sizewell C.
New measures on EVs
Beyond energy bills, the government announced a raft of measures on EVs. These include additional investment in charging infrastructure, business rates relief for eligible EV charge points, and an extension of the 100% first year allowances for zero emission cars.
However, businesses with EV fleets will have noted the confirmation of a new mileage charge. This will be introduced from April 2028 and set at 3p/mile for EVs and 1.5p/mile for plug-in hybrids – lower than fuel duty in most cases (which has been frozen for a further 12 months) but a new charge, nonetheless.
Overall, the outlook is mixed. While the Budget didn’t directly cut costs for most businesses, it demonstrated that policy costs on bills are now under sharper scrutiny. That could bode well for the future, but it’s clear that businesses will benefit from staying proactive in the near-term.
That’s where Good Energy comes in. Our renewable energy tariffs and innovative hourly-matching products can help your business start saving money today. And with commercial solar and heat pump installations, we can help you cut your energy bills and carbon footprint long into the future.
