Industry unites behind plan for crisis fund to control soaring energy bills
The energy industry has united behind a plan to set up a crisis fund that could prevent bills from soaring next year and provide a lifeline for households struggling with the cost of living.
Energy UK, the trade body for the sector, has written to the chancellor, Nadhim Zahawi, to back calls for a “deficit tariff scheme” to be established as a long-term solution to the energy crisis.
Under the plan, commercial banks would put cash into the state-backed fund, which suppliers could then draw on to freeze customersbills at the current price cap, £1,971, for two years.
The cost of the scheme would then be paid back over 10 to 15 years through a surcharge on bills or via taxation. However, the scheme could create a debt pile of up to £50bn, far greater than alternatives including Labour leader Keir Starmer’s £29bn plan to freeze the price cap.
The intervention of Energy UK, which counts the industry’s biggest players among its membership, including EDF Energy, Ovo and National Grid, will add further weight to the proposals.
The Treasury is assessing ways to support households with the cost of living crisis this winter, with plans to present the incoming prime minister with a menu of options once the contest to replace Boris Johnson concludes on 5 September.
The energy regulator Ofgem is due to announce the level of the next industry price cap on 26 August. Experts expect annual bills to hit £3,852 from 1 October and then top £4,000 from January.
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The Guardian revealed this week that Centrica and Ovo supported the idea, which had been presented to government by fellow suppliers, ScottishPower and E.ON.
Read more on theguardian.com
