The owner of British Gas wants to sign up to a plan for new, long-term electricity generation contracts that would mean accepting lower profits in the short term. Mrs Truss has been accused by Labor and the Lib Dems of siding with the energy giants after she refused to impose a new windfall tax on profits as part of her plan to freeze £2,500 bills for two years. But part of the new prime minister’s plan is to get power producers such as Centrica to agree to stop tying the price of electricity – sold to suppliers – to rising wholesale gas costs. Centrica chief executive Chris O’Shea said it wanted to be the first company to sign a new rates contract, saying talks with Whitehall officials were continuing. “We’re in this business for the long haul. We are not in this business to maximize our profits this year,” Mr O’Shea told The Guardian. The Centrica boss added: “We are obviously in this business to create value for all our shareholders, our customers, our country [and] Colleagues. But it’s not about maximizing this year’s profits. it’s about a long-term sustainable business.” The structure of the system currently means that all electricity is closely tied to the price of natural gas, which has soared since Russia’s invasion of Ukraine in February. The UK’s Energy Research Center first proposed that nuclear power stations and renewable electricity producers could sign new “contracts for difference” (CfDs) to sell their electricity at lower prices, in exchange for fixed prices over the long term . Energy UK – the body that represents many of the industry’s big giants – is now enthusiastic about the idea, estimating it could cut £18bn every year from household and business energy bills. But the plan has been criticized. The Resolution Foundation think tank said there was a risk of “delaying but locking in” huge profits for power producers. Labor has supported the same view. Shadow climate secretary Ed Miliband said long-term contracts would “lock in” profits for power companies for years to come, warning they would lead to higher than necessary household bills in the future. “What Energy UK has said is that we will accept slightly lower prices now so we can have much higher prices over the next 15 years,” he said on Thursday. “This would be a terrible deal for the British people, a terrible deal for ratepayers.” Centrica’s chief executive said it was in the company’s best interests to help reduce bills at this time. “We supply more than eight million homes and businesses in the UK with energy – if they can’t afford their energy, we don’t have a viable business,” said Mr O’Shea. Mrs Truss announced the energy price guarantee hours before the Queen’s death on Thursday. Expected to be paid for by a huge amount of borrowing, it will cap all household bills at £2,500 for two years, while businesses will have similar support for at least six months. No 10 said it did not believe the mourning period would have any impact on politics, confirming on Friday it would not require MPs to pass emergency legislation. Ministers aim to sign standard contracts with energy suppliers within the next two weeks to ensure they are ready to deliver the new unit price cap from 1 October. Chancellor Kwasi Kwarteng, who has yet to specify how much it will cost the government to subsidize energy suppliers for extra wholesale costs, has yet to find a date to unveil details of his emergency package. It was expected to arrive on September 19th. However, the suspension of parliament for 10 days of mourning could arrive almost immediately at the recess for the party conference period – leaving open the prospect that MPs may not return until October 17.
