The ministers are said to provide for new levies on gas bills as part of plans to phase out conventional boilers by 2035.
The government will remove green taxes from electricity bills and add new charges to gas bills in an attempt not to increase the overall cost to households, according to reports.
The taxes will finance low-carbon heating and are expected to be announced in the long-awaited heating and buildings strategy, which is expected to be released ahead of the Cop26 climate conference next month.
Energy providers criticized the energy price cap on Saturday, saying it would not protect households from an expected rise in costs.
Soaring gas prices have bankrupted nine national energy companies, forcing 1.7 million customers to find new energy suppliers at higher prices. Energy companies have warned that supplier bankruptcy will result in higher costs for households.
Paul Richards, the chief executive of Together Energy, which he says is currently experiencing losses, told BBCRadio 4 Today program: âPrice caps as a mechanism are not suited to the industry, nor to the customers.
“When the reverse situation arises and the wholesale price begins to drop sharply, the price that will be passed on to customers in April may seem like a very, very bad deal, whereas at present the cap on prices. price sounds like too high a price good to be true.
Mr Richards said if the energy cap protected customers in the short term, there were between Â£ 1 billion and Â£ 3 billion in costs due to failed suppliers that would be imposed on businesses and households.
The independent revealed yesterday that ministers had been privately warned that millions of people would face potential price hikes of more than a third next spring. Sources in the energy sector said they told the government that a 34% increase in the energy price cap may be needed next April to save risky businesses.
Gas prices have already reached record highs as economies around the world recover from the pandemic. Wholesale gas prices on Thursday were 10 times higher than in October of last year. Some analysts predict that bills could rise by Â£ 400 or more next year if wholesale prices continue to rise.
Ofgem can change the energy cap twice a year. It raised the cap from 12% to 13% to Â£ 1,277 a year from 1 October, after raising it in April due to rising wholesale costs.
British Chambers of Commerce have called for the introduction of an energy price cap for small and medium-sized enterprises (SMEs) facing rising gas prices. However, David Dalton, managing director of British Glass, told BBC News that a price cap for SMEs would help but was probably “too little too late”.
Green taxes on gas bills should be announced in a few weeks
The government is set to push forward with gas bill levy plans to finance low-carbon heating over the next two weeks.
The new strategy, which would be released before the start of Cop26 in Glasgow next month, involves a new carbon pricing system that will increase the price of gas bills.
The government plans to offset the rise by reducing the price of electricity – which is significantly higher than that of gas – through the removal of environmental taxes on electricity bills over the next decade.
A government source said The temperature that the plans were “madness” and that Downing Street did not appreciate “the reality of the problem we are facing with energy prices”. The source said: âThere is always a feeling that we just did it and it will get better in a few months. But it is very clear that it will get worse before it gets better.
A spokesperson for the Ministry of Business, Energy and Industrial Strategy said: âWe will be defining our next heat and buildings strategy shortly. No decision has been made. “
Ministers have been warned that average annual energy bills could reach Â£ 2,000 next year if wholesale prices continue to rise. The price of natural gas stands at 213 pence per therm, an increase of 461% from last year.
Companies a few days before production stops
Leaders of energy-intensive UK manufacturers such as steel, glass, ceramics and paper, have warned the government that unless something is done to tackle soaring wholesale gas prices, they could be forced to stop production.
Despite talks with Business Secretary Kwasi Kwarteng on Friday, industry executives said no immediate solution or commitment had been found.
UK Steel boss Gareth Stace said Channel News 4: âWhat we are asking Kwasi Kwarteng today on wholesale prices is just to intervene, to ease this pressure in the short term, just like in Portugal or Italy, for example. Their governments are already investing billions of euros to help their industries and the UK government has yet to do anything. “
âWe cannot wait until Christmas and beyond. Or even a few weeks. We need action now, we need quick and decisive action, âsaid Mr. Stace.
âRight now there is an energy crisis,â added Mr. Stace. âIf the government does nothing, tomorrow there will be a steel crisis.
Mr Dalton of British Glass said some companies were within days of shutting down production.
Andrew Large, director general of the Confederation of Paper Industries, also said it was clear there were “serious risks” of plant shutdowns due to the price of gas being too high to bear. He warned it would create a ripple effect through the supply chain in retail.
Tory MPs have joined forces with Labor to call on the government to provide more support in the wholesale gas crisis.
Backbench MPs Andrew Bridgen, MP for North West Leicestershire, and Miriam Cates, Penistone and Stockbridge, have backed the government by providing short-term support to energy-intensive industries. Jo Gideon, Conservative MP for Stoke-on-Trent Central, told the BBC that “potters, bricklayers and materials scientists” also needed government support.