Keith Anderson is the chief executive of ScottishPower, one of the big six energy suppliers, which along with rival E.ON agreed on the tariff deficit plan backed last week by the industry’s trade body, Energy UK. On Friday, Britain’s energy regulator, Ofgem, publishes its latest update on the price cap from October, which is forecast to jump from its current annual level of £1,971 to £3,582, while it could rising even higher in April to around £4,400. Under ScottishPower’s proposals, household bills would be protected from bill spikes by freezing the cap at around the current level, with suppliers covering the difference between that and the wholesale price of gas and electricity by borrowing from a bailout fund organized by the government through the banks. The cost will be gradually repaid by consumers over a period of 10 to 20 years, either through government borrowing or higher energy bills, or both. But both candidates for the next prime minister have ruled out freezing energy prices, arguing it would be a costly, short-term solution that would fail to solve the underlying problem of soaring energy costs. Rishi Sunak, the outsider in the race to become the next leader of the Conservative party, said he was “nervous and skeptical” about Anderson’s plans. Asked why he did not support the tariff regime on the deficit, he told BBC Radio 4’s Today programme: “We have to make sure that what we do in response is not only affordable but is not going to make inflation worse… by launching policies and programs which add not just billions, but tens and tens and tens and tens of billions of pounds on a permanent basis to our borrowing is dangerous.’ Government sources also played down the likelihood that front-runner Liz Truss would back the plan. “The next prime minister will decide how best to support people this winter,” said one. “Both candidates ruled out the possibility of a freeze [the scheme] it’s irrelevant.” Anderson first outlined the deficit tariff plan in the spring to business secretary Kwasi Kwarteng, who is tipped to become the next chancellor if Truss becomes prime minister, according to the Financial Times. The issue was raised again with Kwarteng and Boris Johnson at their meeting with energy bosses earlier in August, where the Centrica boss reportedly voiced his support. Anderson said the cost of living crisis caused by skyrocketing energy bills was “bigger than the Covid pandemic”, telling STV News that energy costs must be frozen. Wholesale gas and electricity prices were already rising as the global economy recovered from the coronavirus pandemic, before Russia’s invasion of Ukraine sent them soaring. Moscow is using its control of European gas supplies in an attempt to gain political leverage. Subscribe to Business Today Get ready for the business day – we’ll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. Warnings about what will happen to Britain’s consumers without further government support continue to pour in from the energy industry. The country is “facing a national crisis, both socially and economically because of this energy situation,” said Iain Conn, former chief executive of Centrica. “Something has to be done and done quickly.” The government must step in to “dramatically reduce bills this winter” while working internationally to lower wholesale energy prices, Conn told BBC Radio 4’s Today programme. “The size and pace of price increases is simply impossible for customers, whether they are individuals or businesses, to plan for, manage and afford,” Conn said. He added that he supported Anderson’s deficit tariff plan. On Tuesday, the head of EDF Energy’s retail business, Philippe Commaret, said households were facing a “dramatic and devastating winter”, adding: “In January, half of UK households could be in fuel poverty.”
