Liz’s big moment: Truss will reveal a £150bn proposal to lock energy prices at £2,500 TODAY – but warn that fracking and North Sea reserves MUST be utilized to prevent future cost increases.
Liz Truss plans to reduce the burden of home energy bills by freezing them at a typical amount of £2,500.
New Prime Minister will insist that inaction on the scale of the Covid response will harm the economy.
However, Ms. Truss will caution that significant reforms are required to secure Britain’s long-term energy supplies.
Today, Liz Truss faces a make-or-break moment in her premiership as she presents a £150 billion proposal to freeze energy prices.
Later in the Commons, the Prime Minister will pledge to limit household prices at £2,500 per year until 2024 – less than half the level many feared they would reach. Including other aid, the majority of consumers should experience minimal changes to their current bills.
Ms. Truss will concede that the scope of the intervention is comparable to the response to Covid, insisting that the alternative is to do nothing and allow the economy to suffer tremendous damage.
To ensure the country is ‘never in this position again,’ she will also proclaim that the fracking prohibition must be lifted and oil and gas exploration in the North Sea must enter a new age.
The action will alleviate the uncertainty affecting millions of households.
The freeze is expected to last at least 18 months and could cost taxpayers up to $150 billion, which is more than double the price of the furlough program.
In addition, there will be a package of assistance for businesses facing disaster owing to skyrocketing energy bills. The specifics are not yet known, although the duration is expected to be shorter.
This morning, in a series of TV appearances, Leveling Up Secretary Simon Clarke stated that if the government did not interfere, UK plc would suffer “enormous damage.”
However, he rejected Labour’s calls for a new windfall tax on the enormous profits produced by energy companies, which Labour believes could raise tens of billions of pounds.
On September 7, 2022, British Prime Minister Liz Truss attends her first cabinet meeting at 10 Downing Street in London, Britain.
Ms. Truss would withdraw the ban on fracking in locations where there is community support, ending a 2019 ban.
Before Wednesday night’s statement, Ms. Truss stated, ‘I am aware that families and companies across the nation are concerned about how they will make ends meet this fall and winter.
‘Vladimir Putin’s war in Ukraine and weaponisation of the gas supply in Europe is driving a spike in world prices, and this has only made it more apparent that we must strengthen our long-term energy security and supply.
“We will take urgent measures to assist individuals and businesses with their bills, as well as decisive effort to address the core causes of these issues, so that we do not find ourselves in this position again,”
The prime minister announced she will “open up more supply in the North Sea,” with ministers poised to approve an additional 130 drilling and exploration licenses.
This year, North Sea output has already increased by more than a quarter due to record prices making previously uneconomical fields drillable.
Additionally, the Prime Minister pledged to move forward with Boris Johnson’s proposal to approve a new generation of nuclear power stations.
And Whitehall sources indicated that Miss Truss would terminate the 2019 prohibition on fracking in locations where it has popular support by lifting the moratorium.
One individual remarked, ‘We need to move forward on every source of energy supply.’ The severity of the problem necessitates the consideration of additional supply sources that are politically acceptable.
Although she had advocated against granting universal “handouts” to address the fuel problem, her allies claim the severity of the bill increase compelled her to reconsider.
Ministers acknowledge behind closed doors that the eventual cost of the energy package is “unquantifiable” because it will rely on the level of wholesale gas prices.
The taxpayer will effectively subsidize the price of energy under this arrangement. On average, households will pay a set rate of approximately £2,500, with the government covering the difference between this amount and market rates.
The Centre for Policy Studies estimates that funding the freeze at the price cap level of £3,549 per year would cost £29 billion per year.
This would soar to £81 billion every year, according to the research group, if prices reach the predicted $5,387 in January.
The cost might skyrocket to a stunning £116 billion if gas prices reach the £6,616 anticipated for April 2019.
Under Truss’ new plan to combat growing energy costs, homeowners will pay a fixed rate of approximately £2,500 on an average bill, with the government covering the difference between market pricing and the fixed rate.
A separate scheme for firms might cost an additional £40 billion, but is only projected to last one winter.
Ms. Truss has stated that there will be assistance for the 1.5 million homes in the United Kingdom that use heating oil, the most of which are located in rural regions.
Yesterday, the size of the rescue package prompted concerns about the size of government borrowing and contributed to a new decline in the value of the pound.
As part of his efforts to convince investors that the government will be “fiscally responsible,” the new chancellor Kwasi Kwarteng met with major financial institutions.
Mr. Kwarteng indicated that he will borrow tens of billions of pounds to reduce taxes and reduce energy costs. However, he stated that ministers are dedicated to ensuring that the economy develops faster than the nation’s debts.
He stated, “The Prime Minister and I are committed to taking immediate, decisive action to assist the British people, while pursuing an unabashedly pro-growth agenda.”
“We must be decisive and approach matters differently. This means focusing ruthlessly on how to unlock business investment and expand the size of the British economy, as opposed to how to redistribute what remains.’
Fracking companies are drafting plans to offer up to a 25% reduction on monthly energy costs to those who reside close to an operational well.
There is disagreement among ministers over the extent to which fracking could increase supplies. As Secretary of Business, Mr. Kwarteng was skeptical about the speed and magnitude of the impact on petrol prices.
Some think the controversial technology is more dangerous in a highly populated nation like the United Kingdom. The approach has been frequently employed in the United States, a land of vast open areas.
However, the new Business Secretary, Jacob Rees-Mogg, is an ardent proponent of the technology and is already reviewing business proposals to relax strict planning regulations.
Companies engaged in hydraulic fracturing are drafting plans to offer up to a 25 percent reduction on energy bills to those who reside near an active well.
With government help, the industry has informed the Treasury that the first shale gas may be used to heat homes in the United Kingdom within 12 to 18 months.
How will the new energy bill rescue function?
What plans does Liz Truss have?
The new British prime minister will promise a freeze on typical energy bills of almost £2,500. The freeze is more than £1,000 less than the latest energy cap of £3,549, which will be implemented in October. In addition, households will continue to receive a £400 rebate, as announced in the summer. According to Chancellor Kwasi Kwarteng, the support package is likely to be required “this winter and next,” indicating that it will be necessary for at least 18 months.
How will it function?
Ministers will sign contracts with energy companies forcing them to provide fuel to residential consumers at a fixed price. Then, the taxpayer will cover the difference between the fixed price and the market price.
Will firms get support?
Yes. Yesterday, the prime minister pledged to assist businesses with growing costs, stating that firms will receive assistance with the “acute price issue” this winter. Examining ideas to fix the unit cost of electricity sold to businesses, ministers. According to reports, however, the issue is “complicated,” and the complete package may not be finalized until the next week.
How much will it cost?
Cost estimates vary significantly and are dependent on the wholesale price of energy. A Whitehall source estimated that 100 billion pounds would be the ‘high end’ of costs, although ministers concede in private that it may cost 150 billion pounds or perhaps more if gas prices continue to rise.
How will it be financed?
The enormous expense will be covered by general taxation. Yesterday, Ms. Truss ruled out extending the new windfall tax on energy companies, citing the potential impact on future investment in supplies.
Will it lessen the chance of blackouts?
No. Experts have cautioned that the strategy could increase the likelihood of winter power shortages since users will have less incentive to reduce consumption. With other European countries considering price freezes and Russia threatening to further reduce supplies, there is a rising danger of blackouts if wind turbines cannot perform due to still weather conditions.
What is the long-term plan of action?
In an effort to reduce Britain’s reliance on global markets, the Prime Minister will also announce measures to “radically” expand local energy sources. This will entail a rush to extract gas and oil from the North Sea, as well as a fresh push to construct more nuclear power plants. Ms. Truss is also anticipated to ease the restriction on hydraulic fracturing, which might unlock vast new gas supplies if people can be convinced to accept the controversial process.
Will local communities be forced to participate in hydraulic fracturing?
The controversial practice of fracking was suspended in 2019 due to worries about earthquakes. However, the industry maintains that it is safe, and a recent technical assessment for ministers – which has not yet been published – is thought to have opened the door to its resuming as long as environmental safeguards are implemented. Ms. Truss and the new Business Secretary, Jacob Rees-Mogg, are receptive to corporate proposals to loosen the technique’s stringent planning constraints. In regions where shale gas is extracted, fracking companies also promise to offer residents discounts of up to 25 percent on their energy costs.