HOUSEHOLDERS and businesses will be shielded from proposed electricity price hikes for the next two years.

The Council of Ministers has agreed short-term financial support for the Manx Electricity Authority (MEA) to protect customers during a period of spiralling global fuel costs.

Economic Development Minister Allan Bell MHK, who has chaired a working group set up by the Council of Ministers amid concern over the effect of increasing energy prices, said: "My department has had concerns for some time now over the impact of rising fuel bills on local businesses and the implications of that for the Island's economy.

"This holding measure agreed with the MEA will at least provide some reassurance and stability for businesses, and indeed for households, over the next two years.

"In the meantime the Department of Economic Development will be stepping up its promotion of existing schemes, including capital grant support, to help companies such as manufacturers achieve greater energy efficiency."

Chairman of the Manx Electricity Authority Quintin Gill MHK said: "The MEA is doing all it can to minimise costs but is unable to control or influence global energy prices and is pleased to be working closely with government departments to protect our customers."

The government's package of financial support for the MEA over the next two years comprises relief from interest charges, financed from internal sources, worth £7.9m in total and additional capital advances totalling £6.6m.

Without this support the MEA would have to increase electricity prices by approximately 10 per cent over the period to 2013, the government has said.

The relief package will be subject to the necessary Tynwald approvals as part of the 2012/13 Budget.