Energy suppliers Centrica PLC (LSE:CNA) the owner of British Gas, and Octopus Energy are among firms backing a plan to freeze energy bills this winter.
The suppliers are calling for a multi-billion-pound ‘tariff-deficit fund’ to help stop household bills rising for up to two years or more, the Guardian reported.
Centrica’s chief executive Chris O’Shea endorsed the plans during a meeting between government ministers and the energy sector on Thursday.
Greg Jackson, chief executive of Octopus, said: “Because of the war in Ukraine, the UK is having to pay £51bn extra for its gas – the equivalent of 9p on the basic rate of income tax.”
“Urgent action is needed to help people through this winter, whether it be a doubling of the existing government support scheme, freezing the price cap, or a private-sector initiative like the tariff deficit proposal.”
At Thursday’s meeting, Prime Minister Boris Johnson met with energy bosses alongside chancellor Nadhim Zahawi and business secretary Kwasi Kwarteng, where they heard proposals around how a fund could operate.
The ministers were presented with a plan to double Rishi Sunak’s cost-of-living package of funding for energy bills from £400 to £800 per household, or to freeze the energy price cap by using public or privately raised funds.
Labour leader Keir Starmer outlined plans on Monday to freeze the energy price cap on household bills by increasing the amount raised through the proposed ‘windfall tax’ on oil and gas profits.
He said that £8bn could potentially be raised from taxing oil and gas profits, which could help fund the freeze this winter.
In June, Labour proposed setting up a £600mln contingency fund to support struggling companies and energy-intensive industries, which would be paid for by a one-off windfall tax on oil and gas producers.
Debate over a fund that could help deliver the price freeze on energy has now been reignited within industry.
ScottishPower and Eon discussed plans with ministers for a tariff deficit fund, supported by banks, that would be underwritten by a government guarantee.
Such a fund could freeze the cap on annual energy tariffs at £1,971, which analysts forecast could otherwise rise to £4,000 next year, for two years.
The cost would be paid back over a decade to 15 years through surcharges on bills or taxes under the latest proposals.