The U.K. government will cap energy costs for businesses at “less than half” the anticipated wholesale price in its latest major intervention to shield the economy from the impact of the energy crisis.
Businesses, charities and public sector organizations will automatically qualify for a new legally mandated “Supported Wholesale Price,” which the department for business, energy and industrial strategy said it expected to be £211 per megawatt hour for electricity and £75 per megawatt hour for gas.
State support will come into force from October 1 and last until March 31, 2023. The government called the six-month timeframe an “initial” period, with a review of the plan due by December to assess whether support should continue beyond March.
Firms on fixed contracts agreed after April 1 of this year will also benefit.
A similar support package for domestic consumers was announced earlier this month. Though neither intervention has been given an official cost estimate, analysts expect the costs of the domestic energy plan could be as high as £150 billion, while support for business is likely to amount to tens of billions of pounds. Energy analysts Cornwall Insight estimated the likely cost at around £25 billion.
Prime Minister Liz Truss said she understood the “huge pressure” faced by businesses and that the support package was designed to provide “certainty and peace of mind.”
Business leaders had warned that many firms could be forced to shut down due to unaffordable energy bills this winter unless they received state support.
Chancellor Kwasi Kwarteng said the support package would prevent firms collapsing, while limiting inflation.
