Small firms hit by energy rises with no price cap

Household bills are protected — but businesses face the full shock

Households are braced for the highest energy bills in three years, but Britain’s small businesses face an even bigger shock. There is no business price cap, no general government support and no protection from soaring network charges. As firms pass those costs on, families could end up paying twice: first through their energy bills and again at the till.

SMALL BUSINESSES FACE HIGHER ENERGY BILLS

The new Ofgem energy price cap means household bills will be the highest in three years That will be a struggle for many households and millions are already in debt to their energy suppliers, but the picture is even worse for small and micro businesses. Unlike households, businesses are not protected by any price cap and that means their costs go up, probably leaving them with no choice but to increase prices to survive.

That means while families face a painful rise, small firms face uncapped increases in wholesale prices, network charges, and standing charges. Those are rising far faster than domestic bills, and the knock‑on effects will hit every high street, every sector, every community and every household.

No cap for businesses

The July 2026 domestic price cap rose by 13%, driven by higher wholesale gas costs. That’s a real pain point for households but the cap only applies to households, not businesses.

For small firms there is no limit on unit rates or standing charges and suppliers can quote whatever the market will bear, so bills can rise immediately. While households get a regulated ceiling, businesses get full exposure to market volatility.

Rising faster

Commercial energy bills are being driven up by structural changes that households don’t face.

Network charges have exploded

Transmission network charges (TNUoS) rose by around 64% year‑on‑year from April 2026. These increases land mostly in the standing charge, which many SMEs overlook.

A typical business meter now carries a standing charge of 60–110p per day, before using a single unit of energy.

Non‑commodity costs dominate

Non‑energy costs (network charges, levies, balancing costs) now make up around 60% of a commercial electricity bill. Wholesale prices get the headlines but they’re less than half the bill.

Government support has ended

Business energy support schemes ended in March 2024, with no replacements planned. Households still get protection. Businesses get nothing unless they are large energy‑intensive businesses supported through schemes like the Government’s Energy Intensive Industries (EII) compensation and exemption packages.

No safety net

While households face a painful rise, small businesses face higher unit rates, standing charges, non‑commodity costs, gas‑linked electricity prices and volatility. Many small businesses will see increases far above 13%.

Cashflow pressure intensifies

Energy is now one of the top three costs for most small businesses unless they are run from the kitchen table. Everything from hospitality businesses to care homes and florists need energy. With no cap, bills can jump mid‑contract, often 20–50% higher, and sometimes up to 70% higher. That pits cashflow under pressure and makes it hard to manage.

More business cuts

High energy costs are already driving shorter trading hours, reduced heating/cooling, fewer staff shifts, cancelled investment and the closures of some energy‑intensive microbusinesses. The household cap rise will reduce consumer spending just at the time that small firms are likely to be forced to put up prices, hitting small firms twice.

Negotiating Energy contracts

Suppliers are tightening terms in their contracts including raising deposits, doing more rigorous credit checks, refusing fixed deals for high‑risk sectors and offering shorter contract lengths. Microbusinesses with thin margins are most exposed.

Double pressure

The household cap rise means consumers will have less disposable income. At the same time, small businesses face higher energy bills with no protection. This creates a double squeeze. As households cut back, businesses pay more and increase prices and attract fewer customers. Margins shrink and closures rise so we’re back around the circle with more empty shops and more crime and anti‑social behaviour around those empty units, causing our high streets to degenerate further. Energy costs are now a high street stability issue as well as a business pain point.

The Price Cap is Painful Takeaway

With network charges up 64%, non‑commodity costs at 60% of bills, and no government support, small firms face higher costs and volatility, driving up the risk of closure as consumers have less to spend. Yet again this is a survival issue for the UK’s smallest employers rather than just an energy problem and the Government has to start here is if wants to regenerate our high streets and support our vital small businesses.