THE government could step in to cover the cost of rocketing energy bills, according to reports.
Energy companies could be handed cash when wholesale prices go over a certain amount, so they don’t have to pass the cost on to customers.
According to the Financial Times the idea known as a temporary price stabilisation mechanism, is being promoted by energy companies.
Prime Minister Boris Johnson has promised to help million of households with the soaring cost of energy bills.
But exactly what that help will look like has not yet been decided.
The PM ruled out scrapping VAT on energy bills calling it a “blunt instrument”.
Instead households in the coldest parts of the UK could get extra cash to help pay for heating bills
The Government already has the Cold Weather Payment scheme which pays some benefit claimants £25 for every seven-day period that temps drop below freezing.
Prices have rocketed this winter leaving families facing a choice of heating or eating.
And they are set to rise further in April when the energy price cap is predicted to go up by 51% according to experts, adding as much as £600 more to bills.
More than half of households are now on a default tariff that limits the cost of average gas and electric bills.
The current price cap is set at £1,277 and is reviewed twice a year. The next rise will come in April and is expected to hit £1,925.
Analysts say the following rise in October could see the price cap shoot past £2,000.
The price cap is now less than many fixed deals offered my energy firms, with the average on offer now £2,391.
There’s no guarantee that energy companies will be paid to cover rising costs so they are not being passed on to customers.
Other ideas are being considered, it’s understood, and energy companies are in discussion with the government about the best approach to take.
Emma Pinchbeck, of Energy UK which represents the companies, told BBC Breakfast that the Treasury has asked the energy industry to look at a mechanism for spreading the cost of gas over a longer period of time.
The Treasury has been contacted for comment.