Liz Truss has already announced a $150 billion plan to freeze energy prices for two years, which may be the biggest announcement of her premiership to date.
The outcome of the strategy will probably determine Ms. Truss’ political career as well as the prospects for Britons for years to come.
What is Ms. Truss’ strategy?
The new PM has pledged a two-year cap on typical home energy costs at £2,500.
The freeze is more than £1,000 less than the most recent energy cap, which is set to take effect in October and is set at £3,549.
In addition, households will continue to get a £400 refund this year, as promised in the summer. As a result, over the coming year, bills shouldn’t change much.
How will it function?
Energy providers are required to provide gasoline to home users at a set price under the terms of the contracts that ministers are signing with the companies.
The difference between the set price and the market level will thereafter be covered by the taxpayer.
Will companies get assistance?
Yes. Business will receive “equivalent” support, according to Ms. Truss, but it will only be available for the first six months.
After that, “vulnerable” industrial sectors might be the target.
Although specifics are not yet known, the government is intending to run this via the wholesale market.
What will the price be?
The total cost estimates are highly variable and are influenced by the wholesale cost of energy.
One Whitehall source estimated the cost at £100 billion, but officials privately acknowledge that if gas prices keep rising, the cost might be as high as £150 billion.
That would be more than quadruple the expense on the enormous furlough arrangement during the outbreak.
How will the cost be covered?
The significant expense is expected to be covered by regular taxes.
Ms. Truss disregarded Labour’s desire to prolong the new windfall tax on energy companies, claiming it may hurt investment in future supply.
Does it lessen the possibility of blackouts?
Experts have cautioned that the proposal might raise the risk of power shortages in winter as customers would have less motivation to decrease use.
There are rising concerns about possible blackouts if weather conditions mean wind turbines do not generate as much electricity as predicted, especially because other European nations are also contemplating price freezes and Russia has threatened to further reduce supply.
What long-term plan has been made?
In an effort to reduce Britain’s reliance on international markets, the Prime Minister also outlined plans for a major expansion of domestic energy sources in the UK.
Along with a fresh push to construct additional nuclear power plants, this will include a rush for gas and oil in the North Sea.
Ms. Truss is also easing the restriction on fracking, which may potentially unlock enormous new gas supplies if locals can be convinced to embrace the contentious method.
Within six months, she said, gas could be produced from fracking wells.
By 2040, Ms. Truss also wanted the UK to be a net exporter of electricity.
Will fracking be forced on local communities?
The controversial practise of fracking was stopped in 2019 due to worries about earth’s earthquakes.
Kwasi Kwarteng – now Chancellor – opposed a resumption as Business Secretary, since he was concerned about the timetables and how much it would bring down gas costs.
But the industry claims it is safe, and a recent technical assessment for ministers – which has yet to be released – is thought to have opened the door to its restart as long as environmental precautions are put in place.
Ms. Truss and the newly appointed Business Secretary, Jacob Rees-Mogg, are amenable to industry requests to loosen the method’s stringent planning restrictions.
In areas where shale gas is extracted, fracking companies intend to give locals discounts on energy bills of up to 25%.