A new scheme to support firms with their energy bills will be announced in the House of Commons on Monday.

The current scheme which caps the unit cost of gas and electricity for all businesses expires at the end of March.

It will be replaced with a new scheme that offers a discount on wholesale prices rather than a fixed price.

Very heavy energy-using sectors, such as steel, glass, and ceramics, are expected to get a larger discount than others, Treasury sources said.

Last week, Chancellor Jeremy Hunt told industry leaders that the current scheme to support businesses was “unsustainably expensive”.

The energy support scheme is mainly used by businesses but is also for charities and public sector organizations such as schools and hospitals.

Firms have been warning of a “cliff edge” when the current support stops at the end of March, and the new scheme is expected to run until March 2024 to avoid this.

But the total level of government support is expected to fall sharply – by more than half – from the £18.4bn the current six-month scheme is estimated to have cost by the time it ends.

This is partly due to wholesale energy prices falling very sharply in recent months.

European gas reserves have held up better than expected thanks to an unusually mild winter in northern Europe.

Wholesale gas prices are now below the level they were before Russia’s invasion of Ukraine, but still three to four times higher than their long-term average.

Annette Dolan, managing director at Bath Aqua Glass, a glass-blowing company, said that even with the fall in prices she is looking at an annual energy bill of £119,000 a year. “And that’s before they put the standing charge on so it is still unobtainable,” she told the BBC.

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