The action, which was announced on Wednesday, will see those living on the Isle of Man pay some of the lowest electricity prices across the British Isles unless other governments follow suit.
People on the Isle of Man had been bracing for a 70% rise in tariffs, adding an additional £500 to the average annual household bill from the autumn.
However, under the government’s deal, the increase will instead be added to customers’ bills over an extended period of time from April.
In a comment, the Isle of Man’s Treasury minister, Alex Allinson, said: “The aim here is to flatten the curve on the cost of living increases and give households a degree of certainty and time to adjust to what may be a longer-term set of challenges.”
“Providing a loan with a 20-year repayment means that the costs of record electricity prices expected this winter can be factored into bills over a much longer period, cushioning consumers from what would be, for many, crippling price rises.”
The price freeze will be funded via a £26 million loan by the government to the island’s electricity provider, Manx Utilities. This loan will then be repaid over 20 years. However, the loan still requires formal approval by the Isle of Man’s legislature.
“The aim here is to flatten the curve on the cost of living increases and give households a degree of certainty and time to adjust to what may be a longer-term set of challenges,” Allinson explained.