Energy bosses are rallying around Scottish Power’s call for a “tariff deficit fund” to ease the pain facing millions of Brits this winter.
There are growing expectations Ofgem will announce a massive 80 per cent hike to the price cap this week, ramping up household energy bills to at least £3,500 per year from October.
The cap is already at a record £1,971 per year, brought in earlier this year following market carnage that saw nearly 30 suppliers collapse.
Scottish Power’s chief executive Keith Anderson has urged the Government to consider a £100bn scheme to freeze the price cap for two years with state-backed loans, which would be paid back over 15-20 years by consumers.
He told the BBC that “bold” action was needed, describing forecasts of a £3,500 per year price cap in October as “horrific.”
Business Secretary Kwasi Kwarteng has recently held talks with industry bosses in recent weeks, including with Anderson – as first reported in The Times.
Kwarteng is likely to become Chancellor if frontrunner Liz Truss wins the Tory Leadership race, and Anderson believed he was seriously considering the supplier’s proposal.
Octopus boss Greg Jackson has lent his support to the idea, while City A.M. understands Ovo Energy and EON UK are also in favour of a deficit fund.
Bill Bullen, chief executive of Utilita Energy, has also called for a price cap freeze but warned additional support will be needed for vulnerable households even if the cap was frozen.
Russian supply squeeze worsens energy woes
Former Chancellor Rishi Sunak unveiled a £15bn support package in May – offering households £400 discounts on their energy bills.
However, this was based on predictions that the cap would rise to £2,800 per year, with wholesale costs rocketing since then amid a Russian squeeze on European energy supplies.
Energy forecaster Auxilione has predicted the price cap could rise as high as £6,442 in April, while Cornwall Insight predicts energy bills will remain historically elevated until at least 2025.
Meanwhile, consumer watchdog Which? has warned that the Government will have to hike its discount by at least 150 per cent or risk pushing millions of households into financial distress.
It said the Government’s financial support for all households must increase from the current £400 to £1,000 – or from £67 to £167 per month from October to March – to offer meaningful relief to households.
Separately, Offshore Energies UK has called on Westminster to back domestic energy production, forecasting that energy bills will remain elevated if the UK becomes increasingly reliant on overseas gas to meet its energy needs.
A Government spokesperson said: “We know the pressures people are facing with rising costs, which is why we have continually taken action to help households by phasing in £37 billion worth of support.”