Businesses in Britain will see the government pick up almost half of their rising energy bills to ensure they don’t run out, ministers have announced.
The wholesale cost of gas and electricity will be reduced for businesses under a scheme which will run for six months from October.
The Government will cap the wholesale price paid by non-domestic customers, which include schools and charities.
The “supported wholesale price” is expected to be £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas.
This is around half the expected wholesale price on the open market, and equivalent to the cap on household energy bills which will be set this October and will last for two years.
Chancellor Kwasi Kwarteng said: “We have intervened to stop the collapse of businesses, protect jobs and limit inflation.
“And with our plans to boost the supply of home-grown energy, we will bring security to the sector, growth to the economy and ensure a better deal for consumers.”
The support a company receives will depend on the type of contract it has with its energy supplier.
Organizations that signed up to fixed-price energy deals before April 1 this year will automatically see the wholesale portion of their bill capped. Those who signed new fixed-price contracts after October 1 will receive the same support.
Companies with fixed or variable rates will get a discount per unit, but the amount of support they can get is limited.
This means that if the price on the wholesale gas and electricity markets continues to rise, your bills will be higher than those on fixed price deals.
The Government said it is working with suppliers to ensure they offer businesses the opportunity to switch to a fixed contract.
The level of support offered to companies with flexible purchase contracts, which include some of the biggest energy users, will also be limited, the Government said.
He said a pub using 4MWh of electricity and 16MWh of gas that signed a fixed-price contract in August could see its bill drop from £7,000 to £3,900 as a result.
Kate Nicholls, chief executive of trade body UKHospitality, said: “This intervention is unprecedented and it is very welcome that the government has listened to hospitality businesses facing an uncertain winter.
“We particularly welcome their inclusion, from the smallest to the largest companies, which combine to provide a large number of jobs that are now much more secure.”
Businesses that are not connected to either the gas or electricity grid will get some form of equivalent support, although details will be announced later.
The support plan will last six months, with a review period halfway through.
The Government will try to decide how to continue supporting the most vulnerable companies after the end of the plan.
