Energy bills could be PAID by the government under radical new plans to ease pain for customers as costs soar
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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.
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The payment is one of several schemes already available to help Brits struggling with bills.
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.
A government spokesperson said: “We recognise people are facing pressures with the cost of living, which is why we are taking action worth more than £4.2bn and supporting vulnerable households through initiatives such as the £500m Household Support Fund and Warm Home Discount.
“The energy price cap is currently insulating millions of consumers from high global gas prices.
"We’ll continue to listen to consumers and businesses on how to manage the costs of energy."
How much are bills rising and what help can I get?
Millions of households are now paying higher bills and that's because the wholesale cost of gas has gone up.
The average household has seen a massive £235 added to their energy bills over the past year.
The price cap was introduced in January 2019 as a way to ensure fair prices for customers.
It is reviewed twice a year to reflect wholesale energy costs, which unfortunately have continued to go up.
Experts have predicted that it could shoot up another £600 in April when the price cap is next reviewed.
In the first instance, if you find yourself worried about paying for your bills, ring up your gas and electric supplier, or suppliers if you have two different companies, and ask for advice.
It’s better to do this before you run out of money or your bills start stacking up as failed payments from a direct debit account could affect your credit score.
If you take the time to have a chat, they might be able to help you out with money from their own scheme, if they run one.
There are some suppliers that have charitable trusts, which help you pay off any arrears you might have.
British Gas Energy Trust, for example, runs a scheme where anyone can apply for a grant, and you don’t even have to be a customer.
Other firms that offer grants just to their customers include:
- Bulb energy fund
- EDF's energy customer support fund
- E.on's energy fund
- Npower's energy fund
- Ovo's debt and energy assistance
- Scottish Power's hardship fund
Your local council may also be able to help with cash and grants if you are struggling with bills through the Household Support Scheme
The winter fuel payment scheme, where those getting the state pension can get between £100 and £300 to offset the cost of keeping their homes warm.
Low income households can get £25 a week to help with energy bills during the winter thanks to the cold weather payment scheme too.
The warm home discount scheme means you can a £140 payment that goes toward your heating costs - but you need to act quick as this scheme has already been closed by some energy suppliers.
You could be eligible for a budgeting loan if you’ve been on certain benefits for six months.
But while this can help cover some costs like if your boiler breaks down and you need to replace it, or you need to buy new energy appliances, like a washing machine or tumble dryer, you will need to pay the money back.
So check the other non-repayable help you could get first.
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If you're worried about paying bills, falling behind or are in debt, there are plenty of organisations where you can seek advice for free, including:
- National Debtline - 0808 808 4000
- Step Change - 0800 138 1111
- Citizens Advice - 0808 800 9060