UK businesses laud energy relief, but costs still a struggle

LONDON (AP) — At Sophia Sutton-Jones' bakery in North London, the electricity bill has more than tripled since the start of the year. It now costs 5,500 pounds ($6,260) a month to power the ovens and keep the lights on at Sourdough Sophia.

“Where should I magically take 4,000 pounds per month extra that I didn’t calculate for?” she said. To cope with rising costs, she's had to borrow 50,000 pounds and raise prices twice this year for her loaves, baguettes and pretzels.

She doubts that even a massive support package announced this week by the U.K. government will make much difference to businesses like hers struggling with soaring energy costs.

Pubs, restaurants, breweries, retailers and other businesses across the United Kingdom are being pushed to the brink by skyrocketing energy bills that have helped send inflation to a four-decade high and fuel a cost-of-living crisis.

Forced to take action by cost increases that threaten to tip the British economy into recession, new Prime Minister Liz Truss’ government released details Wednesday that wholesale energy bills for businesses will be capped this winter.

The government will pick up some of the tab for six months starting Oct. 1 so businesses pay discounted rates that are “less than half the wholesale prices anticipated this winter.”

It's also capping household energy bills and expected to detail more economic intervention Friday.

Energy price increases were stoked first by the global economic recovery from the COVID-19 pandemic, which sent fuel demand soaring, and then by aftershocks of Russia’s war in Ukraine. The U.K. gets only a fraction of its gas from Russia, but it's more vulnerable to volatile spot market prices because it has less nuclear and renewable energy and little gas storage capacity.

The support...