Government capacity auction plans will extend the life of polluting coal-fired power plans and push up energy prices for businesses

Britains small businesses face the looming threat of rising energy bills, after the Government was forced into extending the life of polluting coal-fired power plants, which had been due to close, to avoid blackouts next winter.

The move will increase the cost of electricity generation - meaning higher bills for businesses - to provide back-up power to meet periods of peak demand during cold spells.

The Governments capacity auction, which takes place today (Tues, Jan 31), will controversially extend the life of polluting coal-fired power plants, which had been due to close, to provide back up electricity to meet periods of peak demand next winter.

Enrico Chiorando, an analyst at Love Energy Savings, explained: "This is a backward step. Supply margin is now so tight during peak periods that the Government is having to extend the life of old-style, polluting power plants to avoid blackouts in the UK.

"It is trying to smokescreen the issue by claiming there is no real threat to security of supply. But the reality is that there is. This will lead to higher energy prices, which will affect particularly small businesses, which arent able to hedge against rises.

"It will also see Britains climate change targets being cast aside in a desperate bid to increase capacity."