Power boss says UK government considering energy fund plan

The UK government is "seriously considering" a proposal to set up a new fund to offset soaring energy bills, according to Scottish Power.

Chief executive Keith Anderson said he had been encouraged by talks with Business Secretary Kwasi Kwarteng.

He spoke out ahead of a special summit chaired by Nicola Sturgeon on the energy bills crisis.

The first minister is bringing together power companies and consumer groups to consider additional support.

The energy price cap currently limits payments for domestic customers to a maximum of £1,971 a year.

Energy suppliers Scottish Power, OVO Energy and E.On are also due to take part in Tuesday's summit, with Ms Sturgeon having already insisted that the rise in the cap in October "can't be allowed to go ahead".

Mr Anderson said "bold" action was needed to bring down bills as he warned the Ofgem price hike would be "horrific".

He told BBC Radio's BBC Good Morning Scotland: "I think we've got to a stage now where this is a national crisis, it's of the scale of the pandemic and we need national action."

The Scottish Power boss proposed the price cap should be frozen at the current level for at least two years as the price of wholesale gas continues to rise.

He urged Westminster to set up a deficit fund to cover the difference between what people pay for energy and how much it costs to supply their homes.

Under Scottish Power's plan, the cost could be repaid over the next 15 to 20 years and would be underwritten the UK government.

Mr Anderson said his proposals had been discussed with Mr Kwarteng and he understood they were being "seriously considered" by Conservative ministers.

Asked what Tuesday's meeting with the Scottish government would bring, he told BBC Scotland: "The first and most important thing is to protect customers, is to stop this price hitting customers' bills.

"And if we can all agree on that, that sends a very powerful message to the UK government."

A UK government spokesperson said: "We are providing a £400 discount on energy bills this winter, and £1,200 of direct support for the most vulnerable households.

"While no government can control global gas prices, over 22 million households are protected by the price cap which continues to insulate households from even higher prices."

Ahead of Tuesday's summit, Ms Sturgeon insisted the renationalisation of energy companies "should be on the table" but said Scotland did not have the power to do that.

She called for the price cap increase to be cancelled, and for the financial support already offered by the UK government to be doubled.

The Poverty Alliance is among the organisations represented in the crisis talks.

It is calling on business leaders and Holyrood ministers to guarantee no-one in Scotland will be disconnected from their power supply this winter and to ensure that everyone who needs it can access energy firms' hardship funds.

The organisation also wants to see a reduction in the number of people on pre-payment meters.

Director Peter Kelly told Good Morning Scotland: "The parties round this table this afternoon, particularly the energy companies and the Scottish government, do have a responsibility and do have power to take action.

"That doesn't reduce the fact that UK government have significant responsibility and we're calling on them to do much more than they're doing at the moment."

It's billed as a summit, but it lacks key players to reach the heights required to tackle the energy price crisis: the UK government, the big oil and gas producers, and also missing will be big business customers for energy.

What today's meeting can do is agree a common approach from energy suppliers and money advisers - the message being that it's best to be in touch with your supplier before debt mounts up, before you face the risk of disconnection. Managing debt is going to be difficult for all those involved.

The energy retailers are recruiting staff to deal with expected higher volumes of customer calls, with concern about the impact on staff of being at the front line, handling calls from people in distress.

There may be some discussion of where Scottish and local government resources can be redirected to where they could have most impact.

But the focus will also be on pressuring UK ministers to use their borrowing firepower and to re-shape the market, with Ofgem implementing much of that for the whole of Britain.

Whitehall is the part of this challenge that works with governments of other countries on common projects to shift prices and open up energy supply routes.

What we're hearing from the energy suppliers is that they think the answer will be a cap on prices preferably where they are, and a giant UK government programme, worth tens of billions of pounds, to shoulder the higher costs to customers, with borrowing. That could then be recouped, potentially over several decades.

The way they're presenting that to the incoming Prime Minister is that this is not a giveaway, it need not be higher tax, but it will be necessary.