Energy firms welcome price cap freeze as Truss leans towards £100bn package
Energy bosses have welcomed reports that Liz Truss is edging towards a price cap freeze to stave off heavy spikes in the price cap this winter.
The incoming Prime Minister is expected to permit suppliers to take out Government-backed loans to subsidise the difference between surging wholesale costs and the price cap.
Simon Oscroft, So Energy co-founder, told Morning Wire that he supported the plan – and believes loans should be backed with a deficit tariff fund.
He said: “With wholesale electricity prices continuing to remain high and volatile, urgent action is needed by the new Government to support customers and the structure of the energy market itself. So Energy welcomes reports that energy bills could be frozen by the new Prime Minister. This is something we support, and we have said previously that it could be funded through a Tariff Deficit Scheme.”
Energy bosses were brainstorming potential solutions with Government officials in regular meetings this summer, with Scottish Power boss Keith Anderson first proposing a two-year price cap freeze last month.
Other firms including Octopus, Ovo, EON UK and Utilita have all declared their support for the proposal.
Truss is expected to announce an energy support package worth over £100bn in the coming days, costing even more than the Covid-19 furlough scheme.
If she opts for a price cap freeze, bills would be subsidised and the current price cap of £1,971 for a typical family would be maintained for two years.
Nigel Pocklington, chief executive of rival renewable supplier Good Energy welcomed the latest developments, and regarded a price cap freeze as a “proportionate response.”
He now called on the Government to bring in support to work with “speed” to ensure plans will be in place before next month.
The package also needed to ensure it didn’t encourage excessive use, and protected people not on price capped tariffs.
The energy boss said: “Getting this right will take time.”
He suggested £400 discounts from the Energy Bills Support Scheme, unveiled by former Chancellor Rishi Sunak, could be frontloaded to ensure customers get support in time for winter.
This idea has also been backed by Philippe Commaret, managing director of EDF, when he spoke with Morning Wire last month.