Truss reduces UK typical consumer cap to £2,500

UK consumer energy market regulator OFGEM will be told to reduce the price cap for the typical UK household bill for electricity and gas to £2,500/yr ($2,885/yr), down from the £3,549/yr rate that was to be introduced from October 1.

The move will be funded by government borrowing in the short term. Truss said the reduced price cap would be held for two years in a bid to shield households from the fallout from soaring wholesale gas prices that have pushed up tariffs throughout Europe.

The policy announcement was widely expected with the prime minister arguing the UK needed to confront "extraordinary times" in energy markets with "extraordinary measures." 

Truss also announced UK businesses would receive a funding support package, in effect capping bills for six months. Enterprise energy customers are not covered by the standard regulatory energy cap, raising fears some could go bankrupt in the coming financial year as bills are expected to increase by orders of magnitude.

Further support for businesses will be continued after the six-month grant window, but will be focused on "vulnerable industries", Truss said. Her new government will also look to decouple wholesale prices at nuclear and renewable power plants from soaring gas rates, Truss said, with power plant operators expected to sign 10-15 year contracts at much-reduced fixed prices.