How the scheme is expected to work
MINISTERS said companies on a fixed-term contract signed on or before April 1 this year will see the wholesale part of their bill capped automatically.
The wholesale cost is only part of the bill. It will be capped at £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 wholesale cap on household energy bills that will be set in October for two years.
Those who enter new fixed-price contracts after October 1 will get the same support.
Companies on default, deemed or variable tariffs will be given a per-unit discount, but the amount of support is limited.
This means that if the price on wholesale gas and electricity markets keeps soaring, their bills will go beyond those on fixed-price deals.
The UK Government said it is working with suppliers to ensure they offer businesses the opportunity to switch to a fixed contract.
Chancellor Kwasi
Kwarteng said: “We have stepped in to stop businesses collapsing, protect jobs and limit inflation.
“And with our plans to boost home-grown energy supply, we will bring security to the sector, growth to the economy and secure a better deal for consumers.”
The level of support offered to companies with flexible purchase contracts, which include some of the biggest energy users, will also be capped, the UK Government said.
It said a pub using 4 MWH of electricity and 16 MWH of gas that signed a fixed-price contract in August could see its bill drop from £7,000 to £3,900.
Companies that are not connected to the gas or electricity grid will get some kind of equivalent support, although details will be announced later.
The support scheme will last for six months, with a review halfway through.
The UK Government will decide how to continue supporting the most vulnerable businesses after the scheme ends.
The green levy on companies’ energy bills will also be
removed.