British taxpayers will hand £1.6bn to energy suppliers this year following new UK prime minister Liz Truss's energy cap freeze.
That is what industry experts predict even with companies warning of failures if the support is not provided swiftly enough.
Energy providers will be allowed to make a profit through the prime minister’s subsidy scheme, which capped household bills at £2,500 for two years to prevent homes from being plunged into a crisis on rocketing prices.
Prices were set to increase to £3,549 in October.
“Most suppliers haven’t been making any money with existing profit margin and 30 went out of business last autumn,” an Energy UK spokesman said.
The government will pay suppliers the £1,049 difference between the frozen and pre-threshold October prices.
Truss intends to offer support from November and backdate it to October, so company aid is in line with that of households.
Many smaller energy suppliers have been struggling, while some larger ones like British Gas-owned Centrica PLC (LSE:CNA) and Shell PLC (LSE:SHEL, NYSE:SHEL) have been raking in bumper profits.
Martin McTague, Federation of Small Businesses national chair, said: “Energy cost rises are a clear and present danger to small businesses.
“It’s hard to overstate the level of threat to small firms up and down the country in almost all industries and sectors.”
Last month, Ofgem launched a review into the levels of profit margin suppliers should be allowed to make.
The cost of supplying homes is predicted to reach more than £80bn over the next year.
The government is trying to avoid making a similar mistake to last year, when the timing of the price cap change stopped them from immediately passing on wholesale cost hikes, meaning they absorbed it themselves and could not survive financially.
Bulb, which was the UK’s sixth largest energy supplier before its collapse last year, was the first ever to be bailed out by the government’s special administration regime, which has already cost the taxpayer close to £1bn.