September 25, 2022

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UK cuts energy bills for businesses during winter

UK cuts energy bills for businesses during winter

The British government announced details of a plan on Wednesday to cut energy costs for businesses over the winter, after industry groups warned that higher bills were Threatening the survival of countless companies.

Starting in October and lasting for six months, companies, charities and other public sector organizations, including schools and hospitals, will see the unit wholesale price they pay for energy at 211 pounds (about $240) per megawatt-hour of electricity and 75 pounds sterling for natural gas. The government said that represented less than half of the wholesale prices expected for the winter season. It will bring prices back to what they were in the spring, according to Cornwall Insight, an energy research and advisory firm, that said reducing energy costs for businesses would be “significant.”

Energy prices soared across Europe as Russia restricted the flow of natural gas to the region and countries scrambled to find alternative sources of energy. While wholesale gas prices, which have a significant impact on electricity costs, from recent record levels, they are still much higher than in recent winters. Households and businesses in Britain, even with the caps in place, still face higher than normal energy costs, which have contributed to higher prices for other goods and services, shrinking budgets.

The business-focused plan accompanies a comprehensive initiative of Freeze home energy bills for the coming winter. These expansionary policies were announced without official cost estimates. Economists predict that the cost of freezing the family bill could be £150 billion. But because plans depend on volatile wholesale market prices for energy and a wide range of business contracts, the final bill is uncertain. Economists expect a significant increase in government borrowing to finance policies.

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Martin Young, an analyst at Investec, has estimated the cost of business policy could be between £22 billion and £48 billion. The cost to the government could be up to £25 billion, Cornwall Insight said.

The new government headed by Prime Minister Liz Truss, I just started working in earnest After a period of national mourning for Queen Elizabeth II. Ms Truss announced a plan to reduce family bills on September 8, promising “the equivalent support” for businesses. Hours later, the Queen passed away, freezing much of the government’s activities.

Now, the weight of the economic and social crises facing Britain has returned to the fore, as consumers compete with Fastest increase in inflation in 40 years The specter of recession looms over the economy. Ms. Truss and Finance Minister Kwasi Quarting have committed to promoting rapid economic growth. They have argued that tax cuts will do just that, and some of those cuts are expected to be announced this week. With big spending and tax cuts on the agenda, there are signs that the government Financial plans are not good with investors.

“We have intervened to stem the collapse of businesses, protect jobs and curb inflation,” Mr. Kwarteng said in a statement on Wednesday.

Shawn Hughes, who runs two pubs in St Albans, north London, said he was “extremely encouraged” by the wholesale price cap, but was still waiting to see the total price his energy supplier would offer and what might happen after the first six-month period.

His energy bills are set to rise in November when his current fixed-term contract expires. He estimates the bill will now increase by a third, to £30,000 for one pub over the course of a year. He had previously received a quote indicating he would need to pay an additional £100,000 for electricity and gas.

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“It was impossible to swallow a price hike,” Hughes said before the cap. He added that while the smaller height “isn’t an ideal amount to accept, it is manageable.”

The discount companies will receive varies depending on what type of contract the company has signed — for example, variable or fixed — and when they agreed to it. There will be maximum discounts applicable to Variable Tariff Contracts. The government also said it intends to review the subsidies within three months and to identify the most vulnerable companies that will continue to support them after six months.

“This support package is important and will relieve the cost pressures that are accumulating on businesses,” said Sivon Haviland, director general of the British Chambers of Commerce, in a statement. She added that the six-month subsidy would not be long enough to encourage companies to draw up investment plans.

“There are a host of other challenges that need to be addressed, including labor shortages, supply chain disruptions and rising raw material costs.” Ms. Haviland has been added.