UK to cut business energy prices by more than half

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The UK will cut the wholesale price of energy for businesses and public organisations by more than half this winter, the government said on Wednesday, as it announced new subsidies to try and ward off a wave of corporate collapses.

The business department said wholesale prices for businesses were now “expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter — which is a discounted price per unit of gas and electricity”.

Chancellor Kwasi Kwarteng said the government had “stepped in to stop businesses collapsing, protect jobs, and limit inflation”.

The government added that the level of “price reduction for each business will vary depending on their contract type and circumstances”. It said the scheme would initially run for six months from October to the end of March, but Liz Truss, the new prime minister, has indicated the subsidies could be extended for the most vulnerable businesses.

Truss introduced a domestic price cap of around £2,500 per annum for typical household use earlier this month. But she delayed the details of the business-focused scheme because of the greater complexity of corporate contracts and administration for the support package. The total cost of the domestic and business support scheme is estimated at around £150bn.

The government said businesses and public bodies on existing fixed-price contracts will be eligible for the new scheme for any contract agreed on or after 1 April 2022.

Those on default or variable tariffs will receive a per-unit discount on energy costs up to a maximum of “around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market developments”.

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