London: The British government is developing a plan that may halve energy rates for many businesses to put them more in line with what households are paying, according to people familiar with the matter, as the new administration tries to stem the economic damage from soaring costs.
The bailout would discount the wholesale price that’s incorporated into business energy contracts by fixing it to roughly the same amount charged to households, the people said, asking not to be identified because the discussions aren’t public. That’s about a 50 per cent discount for businesses who’ve recently fixed their contracts.
The efforts are part of a 40 billion pound ($46 billion) support package being finalized by Prime Minister Liz Truss in response to an energy crisis that’s pushed up the cost of running factories and keeping the lights on in shops across the UK. Small businesses are taking drastic steps to contain costs as some energy bills rise by as much as 10 times.
The Department for Business, Energy and Industrial Strategy said it wasn’t immediately able to comment.
The discount, which is slated to last six months from October and could be extended, won’t be straightforward to execute. The specific amount will depend on what the wholesale price was when a business signed its energy contract, and the government will publish the discounts suppliers need to apply when they send bills to customers, the people said.
Suppliers will get rebates for those discounts, which would apply to contracts already signed earlier this year. The potential price cuts wouldn’t apply to the other fees charged by brokers and suppliers, allowing for more competition in the marketplace.
The unit costs for households laid out by the government package announced September 8 are 34 pence per kilowatt-hour for electricity and 10 pence for gas.