UK has been reducing its energy support programmes as Hunt and PM attempt to re-establish budgetary credibility following the shock of former PM Liz Truss.

A new 12-month initiative to assist British businesses in dealing with high energy bills will begin in April and may cost up to £5.5 billion, Treasury minister James Cartlidge announced Monday in the House of Commons. In comparison, the programme it is replacing cost £18 billion over six months.

"It is not viable for the exchequer to fund a big number of firms at the current level," Cartlidge added. "No reasonable, serious government anywhere in the world can protect businesses from this energy price shock indefinitely."

As Chancellor of the Exchequer Jeremy Hunt seeks reductions to help shore up the public finances, the UK government announced a reduction in energy subsidies for companies beginning in April.

The UK has been reducing its energy support programmes as Hunt and Prime Minister Rishi Sunak attempt to re-establish budgetary credibility following the economic shock of former Prime Minister Liz Truss's 7-week stint last year. However, manufacturers have stated that rising energy costs may force them to eliminate employment and output.

The project was launched to protect businesses from skyrocketing prices caused by Russia's conflict in Ukraine.

According to Treasury data, most businesses will be able to receive a maximum discount of £19.61 per megawatt-hour for electricity and £6.97 per MWh for gas under the new scheme. Energy-intensive businesses will benefit from higher discounts, totalling to £89.10 per MWh for electricity and £40 per MWh for gas.

Companies will only begin to receive energy subsidies if their expenses exceed £107/MWh for gas and £302/MWh for electricity. The relevant levels for support for energy-intensive businesses are £99/MWh for gas and £185/MWh for electricity.

Since summer highs, wholesale gas and electricity prices have fallen dramatically, with an infusion of liquefied natural gas to Europe and generally mild weather helping to lighten demand on the energy system by increasing storage on the continent.

Nonetheless, costs are still about quadruple what they were before the crisis, with month-ahead gas hovering at 180 pence per therm.

According to Tony Jordan, senior partner at energy consultant Auxilione, "no new contracts would likely qualify" because the new standards mentioned are higher than current pricing levels. "This will only capture those that set prices in late summer when they were over these levels. The number of qualified enterprises will be limited."

UK Steel commented that the new scheme is less substantial than the energy assistance given in Germany, putting British steel makers at a disadvantage.

Businesses, unlike consumers, are not often protected by a legislative price ceiling and are therefore more vulnerable to wholesale costs. Corporate suppliers are not required to hedge energy expenditures, and their traders frequently buy electricity and gas in short-term markets on behalf of major industrial customers.

(Bloomberg.com, bbcnews.co.uk)