Kwasi Kwarteng, the Secretary for the Department of Business, Energy and Industrial Strategy, is reportedly mulling a freeze on the energy price cap, which could be locked in at £1,971 for households for the next few years. Within days, energy regulator Ofgem is set to raise the price cap, with experts predicting that bills could rise to around £3,500 a year.
As millions of households face fuel poverty as a result of unaffordable energy bills, Keith Anderson, the head of Scottish Power has reportedly met with Mr Kwarteng, where he proposed a £100billion plan to freeze energy bills until 2024.
Mr Anderson noted that the Business Secretary, a key ally of Tory leadership contender Liz Truss, has been “seriously considering” plans that involve loaning energy suppliers money to fund a price cap freeze, according to the BBC.
He is also set to present the same plan to Scottish First minister Nicola Sturgeon during a special energy crisis summit that she is chairing.
According to analysts, without urgent intervention from the Government, the price will rise from £3,500 in October, to an estimated £6,500 by next April.
Mr Anderson told BBC Radio that “bold” action was needed to bring down bills as he warned the Ofgem price hike would be “horrific”.
He said: “I think we’ve got to a stage now where this is a national crisis, it’s of the scale of the pandemic and we need national action.”
Under the proposed plans, the Government would guarantee energy suppliers loans of about £100billion, which they calculated to be the difference between the cost of buying energy and the current price cap.
This plan would keep the bills frozen for households for the next two years while ensuring that energy suppliers do not go bankrupt.
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“We’ve been through all of the details with the current chancellor and other members of the Cabinet as well and I think this is being seriously considered.”
“I think it’s being looked at as probably one of the best ways of dealing with the issue in the short term, in the short to medium term. But the Government will also look at other options.”