LONDON, England: Businesses struggling with soaring energy costs have welcomed the British government's move to cap wholesale electricity and gas costs for businesses at less than half the market rate beginning next month.
Wholesale prices for electricity will be capped at about 211 pounds ($239) per megawatt hour (MWh) and for gas at 75 pounds per MWh.
We have stepped in to stop businesses collapsing, protect jobs and limit inflation," said Finance Minister Kwasi Kwarteng, who is due to deliver a fiscal update this week.
Wholesale gas and electricity prices in Europe surged after Russia invaded Ukraine and have remained volatile since then. The final unit prices for the scheme will be confirmed on Sept. 30.
"The difficulty with giving cost figures is that this will depend on where the price of energy goes over the winter, and that's very difficult to forecast so I can't give you an absolute cost," Business Minister Jacob Rees-Mogg said, as quoted by Reuters.
It will be in the tens of billions of pounds unquestionably," he added.
This week, the government is making several announcements aimed at averting an impending economic crisis.
Kwarteng is expected to set out some details on how he will pay for the energy scheme, while at the same time delivering on promises to cut taxes, although the total cost of the energy scheme will depend on market prices over the coming months.
The business energy scheme will initially apply from Oct. 1 to Mar. 31, 2023, for all non- domestic energy users, including charities and the public sector, such as schools and
hospitals, as well as businesses.
"We're going to review it after six months. We'll make sure that the most vulnerable businesses, like pubs, like shops, continue to be supported after that," Prime Minister Liz Truss told broadcasters.
In a scheme that was heavily criticised by most political parties in the region, the government also announced support for households in Northern Ireland, on the same level as the equivalent scheme in the rest of the United Kingdom, taking effect from November, though backdated to the start of October.