Households may get £200 as energy bills set to soar

The biggest rise in energy bills ever is set to be announced on Thursday, but the government could step in to help cut bills by up to £200 per household.

The energy regulator will detail how much bills can rise from the beginning of April, with forecasts it could go as high as £2,000 for many homes.

Loans to enable energy firms to cut money from customers’ bills was likely, the BBC has been told.

Ministers may also extend targeted help for those in need.

Energy firms are struggling under the weight of surging wholesale gas prices, and passing on some of that rise to consumers, driving up the cost of living.

It has pushed inflation up to a 30-year high, leaving the government under pressure to intervene.

The Treasury’s “rebate and clawback” scheme, first revealed in The Times, would involve providing around £5-6bn in loans to energy firms to enable them to lower bills from April.

But it has raised concerns among providers because the money would still have to be paid back eventually.

Energy bosses told the BBC they are still in the dark about the details, but thought companies would recoup the money from households over three to five years as wholesale costs fall.

However, the bosses said wholesale prices are not expected to fall significantly any time soon.

Ofgem was meant to reveal April’s price cap – which sets how much providers can charge for gas and electricity – next Monday, but it has brought the announcement forward.

The government’s announcement, which could come as early as Thursday, may also include an extension of the warm homes discount and changes in other benefits.

One of the UK’s biggest providers, EDF, said in a statement it would welcome government action, but gave no details of any plan nor the timing.

Philippe Commaret, the firm’s managing director for customers, said: “Ballooning wholesale gas prices are driving energy bills up and customers need government to act now, especially to support those most in need.

“We look forward to hearing from government urgently on how it will help struggling households beyond the support energy companies already provide. Delaying action adds to the stress and anxiety households face.“

It is feared Ofgem’s announcement will take the average annual domestic energy bill from 1 April to about £2,000 for 22 million households, up from about £1,300.

That has intensified calls in recent weeks for the government to step in to help struggling households.

The cost of living is forecast to rise further this year, along with interest rates.

The cost of broadband and mobile phones, raw materials, transport and fuel, and food and drink are among a wide range of products and services now on the rise.

There are also planned tax rises in April, with Prime Minister Boris Johnson under intense pressure to scrap an increase in National Insurance. But he, and Chancellor Rishi Sunak, said at the weekend the NI rise would go ahead.