Octopus Energy said the government could significantly ease the pressure on households facing a 50% rise in energy prices this coming spring by allowing the spread of the increased cost of energy over several years.
Greg Jackson, the chief executive and founder of Octopus, told customers in a letter that industry is still working with the government to come up with a plan to protect consumers from the worst of the soaring price of wholesale gas, but cast doubt on the success of the discussions.
"We are putting enormous effort in, alongside many others: energy suppliers, Ofgem and the government, to try and ensure there is decisive, collective action that best protects as many households as possible," he wrote.
"Honestly, I don't know if we'll be successful."
The energy price cap set by regulator Ofgem is expected to rise by 50% to almost £2,000 a year from 1 April.
The government is expected to announce some form of support for households before that.
The price cap means energy suppliers are unable to pass on the cost of wholesale gas to their customers. As a result, 27 suppliers have collapsed since August 2021 with other companies having to take over their customers.
Octopus has taken on the 580,000 customers of Avro Energy, which failed last September.
In his letter, Jackson said he favoured a Treasury-led scheme to help spread the increased cost of energy over several years.
He said options such as removing VAT and green levies from bills and extending the Warm Home Discount would not be enough to make a significant difference.
Average household bills are likely to be £60 per month higher year-on-year from 1 April, "a huge burden for most homes", he noted.
"Spreading the cost of this sudden spike over several years will allow us to make the imminent April rise much, much smaller - more like £12 per month - and adjust prices to gradually cover the cost over time," Jackson said.
"And with the benefit of time, the gradual rises are likely to coincide with falling wholesale prices, making the effective increase much smaller, and eventually dropping below current prices."