Ministers cut company energy bills amid calls for longer-term support | Energy bills

Jacob Rees-Mogg is expected to announce a cap on energy prices for businesses that would cut the rates they pay by half this winter.

The company secretary will provide support to businesses, charities and public sector organizations for six months from Oct. 1, after Liz Truss said they would receive aid equivalent to cost-cutting households.

Rees-Mogg is expected to cut electricity and gas tariffs for non-domestic users by approximately 50% and 25%, respectively, compared to current contracts for the winter, in a plan first reported by Bloomberg and confirmed. by government sources.

However, the cap may not be enough to prevent lasting scars on Britain’s high streets, as pubs, shops and schools looking to sign new electricity contracts have been charged prices up to 10 times higher than current rates.

The Federation of Small Businesses (FSB) has said the UK will face a “lost generation” of traders without significant intervention, adding that a cap would not affect the high flat rates imposed by suppliers. Larger companies are also concerned.

On Tuesday, pub group Fuller’s said its annual electricity bill is likely to rise from £8million to £18million, warning that the increases facing the hospitality sector are “unsustainable”.

Some Labor and even Conservative MPs would be frustrated that Rees-Mogg will not announce the plans in the House of Commons on Wednesday.

It means there will be no opportunity for him to be questioned about the support in the chamber because parliamentary affairs are handled by oaths to King Charles III.

Details of the scheme emerged when Truss confirmed that pubs will receive help with their energy bills for more than six months, but many other vulnerable businesses and public services will have to wait until winter to find out if they qualify for long-term support.

Ahead of the government’s announcement on energy aid for businesses, Truss said pubs are one of the types of businesses vulnerable enough to receive support in the long run.

She said vulnerable businesses will be told within three months if they are eligible for longer-term support beyond the next six months, but she listed pubs as a group of businesses that are likely to qualify. Others – including schools and charities, as well as small shops and merchants – will have to wait.

In an interview with the UN General Assembly in New York, the prime minister said: “What else I can say is that for companies that are vulnerable, that do not have the resources to … invest in their own energy supply, we provide support on long term.

“That also applies to businesses such as pubs. The company secretary conducts an assessment of exactly which companies will be included – that assessment will be completed within three months. I can reassure people who own pubs that they are exactly the kind of businesses that will get that support in the longer term.”

Truss was previously criticized for not setting out in detail how businesses would be helped, other than getting the same help as consumers.

From October, the energy bill of households will be capped at an average of € 2,500 per year.

Energy suppliers have also expressed concern that the government could let them decide how to pass state aid to companies that are struggling.

Obviously, executives have told officials: that they will face adversity when asked to decide how best to provide financial support to businesses to deal with rising energy bills.

When Truss announced the freeze, the government said it would “launch a new settlement for all non-domestic customers who would otherwise be at the mercy of high prices as a result of Russia’s illegal war in Ukraine”.

It noted that “the majority of non-domestic customers in the UK have a fixed-price energy contract”.

It was expected that the scheme would offer companies a fixed price for a unit of energy and that suppliers would receive a subsidy to cover the difference between that unit and the wholesale price.

However, there are concerns that suppliers may be asked to ensure that companies actually need the support. Some companies have bought their power in advance at relatively low prices to protect them from sky-high bills.

One supplier said: “There is tremendous complexity here when you look across the board, from heavy industrial users to small businesses. There is the option of lowering the unit rate for energy, but then the question remains whether all companies will receive that support if some have bought their electricity years in advance.

“We don’t want to be its referee. We can never win in that scenario. It has to be universal, otherwise there is always the chance that companies will fall through the cracks.”

Another major energy supplier said: “The government wants to give money and then we see how we spend it. We are not going to make these decisions.

“We are also concerned about companies abusing the system – selling their valuable hedging contracts to other companies and then taking the support as well.”

Under the announced scheme, suppliers would be able to add their own costs and be compensated by the government for the wholesale price cap.

This would be about 21p per kilowatt hour for electricity and 7.5p per kWh for gas. There would be a different ceiling for those paying variable rates. Government sources said this was the most likely model and extent of utility bill support for businesses, without saying how much the total package would cost the Treasury.

Craig Beaumont, head of external affairs at the FSB, said: “If the government goes for a fixed wholesale price, tomorrow we need to understand how that will be applied in practice to small business energy bills. A small business will need to be told quickly by its supplier what its new invoice will be.

“However, there may be no regulation of the other important element of small business energy bills: fixed costs. While consumers will have capped their fixed costs, small businesses will not, and that means energy suppliers can continue to increase fixed costs, thus still meaning small businesses will see their energy bills rise.”

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