The UK taxpayer is to cover a big chunk of the energy costs for firms this winter, in a move intended to stave off a wave of bankruptcies following surging prices.
Business Secretary Jacob Rees-Mogg is expected to announce this morning that the Government will limit the amount companies can be charged for their energy, amid fears that tens of thousands will collapse without state support.
There have been reports that the intervention could reduce companies' electricity costs by up to 50% and cut their outlay on gas by 25%.
The Telegraph says that the initiative is set to last for six months from October and will be applied direct to companies' bills.
The cap is expected to limit the rate businesses can be charged by their energy provider to around 21.1p per kilowatt hour for electricity and 7.5p per KWh for gas, substantially below expected wholesale costs.
The Government will pay providers to make up the difference.
The cap only applies to the wholesale costs. Businesses pay other charges on top, but these are said to be relatively small.
Extreme financial problems
It comes less than two weeks after ministers stepped in to cap household energy bills at an average £2,500 per year for two years from October, amid concerns millions would be tipped into extreme financial problems.
Martin Young, an analyst at Investec, estimated that the bill to help UK firms could hit £25billion or more, with other experts predicting a price as high as £40billion.
It is expected the support will apply to all non-domestic energy users, including companies, charities, local authorities and churches.
A review in three months' time will determine which industries should qualify for further support once the initial six-month period runs out.
Providing support for firms is complicated given the huge variety of contracts they have with suppliers.
Businesses last night welcomed the support, but said more would be needed.
Kate Nicholls, chief executive of the UKHospitality trade group, told the Telegraph: "This is a sticking plaster - a comprehensive sticking plaster - but businesses are clinging on by their finger-tips."
Total bill could exceed £114billion
The total bill for businesses and household support could reach more than £114billion - significantly more than the Covid furlough scheme, which cost £70billion.
Separately Mr Rees-Mogg is also preparing to ease restrictions on earth tremors caused by fracking after energy companies warned that the current limits will block a new "dash for gas" south of the border.
The Business Secretary is preparing to lift a moratorium on new fracking developments as part of Prime Minister Liz Truss's plan to bolster Britain's energy security.
The Telegraph understands he also favours increasing the limit on seismic activity.
At present, drilling must be temporarily halted if it triggers seismic activity of magnitude 0.5 or more, a threshold so low that it prevents developers testing whether commercial extraction of shale gas is even possible.
A senior government source said: "If we were to stay at 0.5, which is unnoticeable, there will not be any fracking. So if we want fracking, that has to go."
A surge in wholesale gas prices amid cuts to European gas supplies triggered by Russia's war on Ukraine has triggered a crisis in the costs of living and doing business, and sparked a race to improve UK energy security.
Tackling high prices
Governments across Europe have committed hundreds of billions of euros to tax cuts and subsidies in recent weeks to tackle high prices.
But Amin Nasser, boss of Saudi state oil giant Aramco, said yesterday that such caps were not a long-term solution and argued the crisis was sparked by under-investment in fossil fuels.