Farmhouses could face soaring bills due to business tariffs

With many farmhouses sharing their electricity supply with the farm on a business tariff, questions are being raised about whether the domestic element of the bill could be accounted for, so that the occupants do not miss out on the government’s domestic energy price support.

A £2,500 cap on typical domestic energy costs is due to be introduced from October 2022 to October 2024 to help households tackle rising bills.

However, business tariffs will get only six months’ support at what the government has said will be an equivalent, but yet to be defined, level.

See also: Fears farmers could lose out on £400 energy bills discount

NFU Scotland recently carried out a survey of more than 110 businesses which showed nine out of 10 farming families had electricity supplied to the house as part of the farm business.

This is understood to be at a similar level elsewhere in the UK.

NFU Scotland president Martin Kennedy said: “From a business perspective, nine out of 10 farmers and crofters who replied to the survey were previously paying less than 20p/kWh for their electricity and are now having to deal with renewal rates and quotes coming in at up to 92p/kWh.”

More clarity is expected by the government in the coming weeks on whether there will be any flexibility for farmhouses to be included in the price cap.

Splitting tariffs

In the event that these households are able to be included, there is still some concerns about how this would be implemented.

Sanj B, energy consultant and broker at NFU Energy, said: “You wouldn’t be able to split one meter, one meter can only go onto one contract, and a separate meter would need to be installed at the property.”

“There is more than likely going to be a tax difference as well, so it’s always best when considering switching it to a domestic plan instead of a business plan to look at what the difference will be after tax.”

NFU Energy said the best way to calculate which tariff is most cost effective is to look at the annual consumption in units on a domestic contract and compare this with the business rates for the same usage, while also considering any tax implications on the two contracts.

Installing a separate meter

If a farmhouse already has a separate meter to the farm, it may be much easier to split between domestic use and business use.

However, if a new meter needs to be installed, NFU Energy said the network operator should be contacted to find out the cost of installing a new meter at the property.

Typically, suppliers do not charge for the meter installation itself, but if a new supply is needed there is likely to be a charge from the district network operator.