UK Government Announces Energy Price Guarantee for Families and Businesses While Urgently Taking Action to Reform Broken Energy Market

 Department for Business, Energy & Industrial Strategy

♦ Typical household will save an average of £1,000 a year on their energy bills, under a new two-year Energy Price Guarantee

♦ Businesses and public sector organisations will see equivalent support over the winter

♦ New plans will tackle the root causes of problems in the energy market by boosting domestic energy supply

♦ Package will boost growth and curb inflation rises

Prime Minister Liz Truss sets out decisive action to help people and businesses with their energy bills and to tackle the root causes of the problems in the UK energy market through increased supply to ensure the country does not remain in the same position again.

Under the new plans, for the next two years from 1 October, a typical UK household will pay no more than £2,500 a year on their energy bill, through a new Energy Price Guarantee that will reduce the price limited Vendors can bill customers gas units. This takes into account the temporary removal of around £150 worth of environmental charges from household bills. The guarantee will replace the existing energy price cap.

This will save the average household £1,000 per year based on current energy prices as of October. This is in addition to the advertised £400 rebate on energy bills for all households and together brings the cost closer to the current energy price cap.

The new guarantee applies to UK households, with the same measure of support available to households in Northern Ireland.
Those households that do not pay directly for gas and electricity from the grid, such as those living in car parks or heating networks, do not get worse and receive support through a new fund.

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Today’s action will bring significant benefits to the economy: it will boost growth and dampen inflation by 4-5 points, reducing the cost of servicing debt.

The historic intervention comes after no investment in local energy and no reform of the energy market. Putin’s arming of energy supplies has exposed Britain’s vulnerability to global market volatility, coupled with a no longer fit-for-purpose regulatory framework that is driving up bills and slowing economic growth

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Prime Minister Liz Truss said:

Decades of short-term thinking on energy has failed to focus enough on securing supply – with Russia’s war in Ukraine exposing the flaws in our energy security and driving bills higher. I’m ending this once and for all.

I’m acting immediately so people and businesses are supported over the next two years, with a new Energy Price Guarantee, and tackling the root cause of the issues by boosting domestic energy supply.

Extraordinary challenges call for extraordinary measures, ensuring that the United Kingdom is never in this situation again.

As organizations have now no longer benefited from a power fee cap and aren’t usually capable of repairing their power fee via constant deals, many are reporting a projected will increase in power fees of greater than 500%.

A new six-month scheme for organizations and different non-home power users (inclusive of charities and public zone establishments like schools) will provide an equal guide as is being supplied for consumers. This will guard them against hovering power fees and offer them the knowledge they want to devise their business.

After this preliminary six-month scheme, the Government will offer an ongoing, targeted guide for prone industries. There may be an assessment in three months’ time to keep in mind wherein this has to be focused to ensure the ones maximum in want get a guide.

The Government will offer power providers the distinction between this new decreased fee, and what power stores could rate their clients had this now no longer in place. Schemes formerly funded with the aid of using inexperienced levies will even stay funded with the aid of using the Government at some point this yr duration to make certain the UK’s funding in home-grown, steady renewable technology continues.

Whilst the intervention will be funded by the Government, action is being taken to significantly reduce the cost over time, including:

♦ A new Energy Supply Taskforce – led by Madelaine McTernan who headed up the UK’s successful Vaccine Taskforce – has begun negotiations with domestic and international suppliers to agree long-term contracts that reduce the price they charge for energy and increase the security of its supply. The Taskforce and Department for Business, Energy and Industrial Strategy will negotiate with renewable producers to reduce the prices they charge as well.

♦ HM Treasury are announcing a joint scheme, working with the Bank of England, to address the extraordinary liquidity requirements faced by energy firms operating in UK wholesale gas and electricity markets. The Energy Markets Financing Scheme will enable stability to both energy and financial markets, and the economy, and reduce the eventual cost for businesses and consumers. The scheme will provide short term financial support and will be designed to be used as a last resort.

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The Government has learned from past mistakes and is taking action to accelerate the national energy supply, increase our energy resilience and meet our target of making the UK an energy exporter by 2040:

♦ Launch a new oil and gas licensing round as early as next week, expected to lead to over 100 new licences.

♦ Lift the moratorium on UK shale gas production. This will enable developers to seek planning permission where there is local support, which could get gas flowing in as soon as six months.

♦ Drive forward the acceleration of new sources of energy supply from North Sea oil and gas to clean energy like nuclear, wind and solar.

♦ Continue progressing up to 24GW of nuclear by 2050, with Great British Nuclear helping to set direction of getting new nuclear projects online in the UK.

♦ Undertake fundamental reforms to the structure and regulation of energy market through recommendations from a new review of the UK Energy Regulation.

♦ Launch a review to ensure we are meeting our Net Zero 2050 target in an economically-efficient way, given the altered economic landscape. Chaired by Chris Skidmore MP and reporting by the end of this year, it will ensure delivering the target is not placing undue burdens on businesses or consumers.

Chancellor Kwasi Kwarteng said:

Millions of families and businesses across the country can now breathe a massive sigh of relief, safe in the knowledge that the government is standing behind them this winter and the next.

The price of inaction would have been far greater than the cost of this intervention. Not only can we provide urgent support now, but the beauty of our scheme is that it will also bring down inflation, helping tackle wider cost of living pressures.

Business and Energy Secretary Jacob Rees-Mogg said:

The global headwinds caused by Russia’s war in Ukraine, Putin’s weaponisation of energy and the aftermath of Covid, have exposed the need to strengthen Britain’s energy security for the good of the nation and the millions of households and businesses who will struggle to meet the cost of bills this winter.

The action we are taking today will reduce that worrying burden in the short term and will invigorate the long term reforms we need to complete, to resolve the underlying problems in the energy market and ensure the British people enjoy affordable and plentiful energy in future.

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Respected Source :-

From: Prime Minister’s Office, 10 Downing Street, Department for Business, Energy & Industrial Strategy, and The Rt Hon Elizabeth Truss MP Published 8 September 2022