Hope for households as four big energy providers back plan that could freeze bills

Octopus Energy and British Gas owner Centrica have backed Scottish Power and Eon's proposals for a so-called tariff deficit fund.

The scheme would see banks put millions of pounds into a fund which is given a state-backed guarantee.

Suppliers would then use the money to be able to freeze customers' default tariff bills at the current price cap of £1,971 for two years.

The energy suppliers would repay the money over 10 to 15 years through either taxation or a surcharge on bills.

Scottish Power proposed a similar scheme in May, before former chancellor Rishi Sunak announced a windfall tax on energy companies.

The new energy price cap for October 1 onwards is set to be announced on August 26 and has been forecast to potentially be as high as £3,600.

The same forecasters claim Ofgem's price cap could rise again to £4,538 in January and £5,277 in April, although this is contested by the Government.

Scottish Power and Eon's plans have been presented to ministers.

Prime Minister Boris Johnson, Chancellor Nadhim Zahawi and Business Secretary Kwasi Kwarteng met with 15 energy firms earlier this month for crisis talks ahead of winter.

No new plans were announced but Centrica chief executive Chris O’Shea gave his support to the tariff deficit fund proposals during the roundtable, the Guardian reports.

Octopus chief executive, Greg Jackson, told the Daily Express earlier this year: “We've got inflation running at close to 10 percent, and once you get into an inflationary spiral that is very hard to get us out of.

“So, spreading costs over a long period of time reduces the impacts on inflation, and that stops the spiral.”

Another idea tabled at the meeting was to double the £400 energy bill discount brought in by former chancellor Rishi Sunak.

Energy giants vowed to "work closely" with the Government to come up with support schemes.

Mr Johnson said: “Countries around the world are feeling the impact of Putin’s damaging war in Ukraine. We know that this will be a difficult winter for people across the UK, which is why we are doing everything we can to support them and must continue to do so.

“Following our meeting today, we will keep urging the electricity sector to continue working on ways we can ease the cost of living pressures and to invest further and faster in British energy security.”

And read more about additional help with energy bills: the £400 energy bill grant.

Mr Zahawi said: "We have already acted to protect households with £400 off energy bills and direct payments of £1,200 for 8 million of the most vulnerable British families. In the spirit of national unity, they agreed to work with us to do more to help the people who most need it."