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Will the government freeze bills? The cost-of-living crisis seems to be growing by the day. News of inflation, increased energy bills, fuel costs and food prices is a daily occurrence. The fossil fuel industry in particular has taken a hit, with the war in Ukraine causing energy bills to soar.
Annual energy bills forecast to reach almost £5,000 in 2023. People have been thrust into fuel poverty and are struggling to make ends meet. But a small glimmer of good news is on the horizon. Two of the largest energy suppliers in the country are backing a plan which seeks to freeze bills for two years.
Centrica, the parent company of British Gas and Octopus Energy are said to strongly back a plan which aims to spread the cost of rising energy prices over the next decade. It is a plan being discussed within the energy industry currently. A multi-billion-pound facility would be created. This spread the cost of emergency funding, making energy bills more sustainable in the short term.
To do this, commercial banks would put cash into a fund backed by the state. Suppliers could then draw from this fund to make up the difference between what they are charging customers and what the true cost of the bills are. To pay this back, an additional levy would be applied to energy bills for the next 10 to 15 years. The current energy price cap stands at £1,971 annually and is expected to rise in October.
This plan, nicknamed the “tariff deficit fund”, was presented by EON and Scottish Power to the government.
The chief executive of Octopus has said urgent action is needed to support customers with the rapidly rising cost of their energy bills. He also stated the tariff deficit fund was among the options the government needs to be considering to ensure the country doesn’t suffer even further during the winter months.
Centrica have declined to comment on the discussions taking place. However, they have suggested clear action needs to be taken. This is to combat the energy crisis and inflation.
The new energy price cap is expected to be announced on 26th August. It will come into action on 1st October of this year. With two of the country’s leading energy suppliers backing this plan, both with customer numbers of over 10 million each, serious weight has been put behind these plans to freeze bills.
We will keep our readers updated with the coming price cap announcement and any updates on this story. Find all the latest news here.