PM explores 'fundamental' energy reform to cut bills

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The government is going to reform the energy market to cut bills and deal with the issue of huge profits some energy companies are making.

The most expensive generator sets the price that they pay.

It is currently very expensive.

Sources familiar with the discussions say that renewable and nuclear generators will be asked to take up new contracts at fixed prices.

She will need to address the issue of their huge profits if she is to not introduce a windfall tax.

According to Cornwall Insight, energy prices are likely to be more than £40 billion higher due to the fact that some electricity generators are being paid based on gas prices.

The government is planning to spend tens of billions of pounds of taxpayers' money to subsidize energy bills.

Number 10 told Helen Catt that they were looking at reform of the UK energy market.

Paying renewable energy companies less than the market price for gas would result in a reduction in revenues for them.

This approach was accepted in principle by the industry body which represents most of the wind power companies.

Dan McGrail said that they were keen to work with the government.

He said that it made no sense to allow the cost of gas to set the price of electricity.

Most of the UK's largest renewable businesses are represented by RenewableUK.

It says that it is waiting for the government to make a decision on the issue.

Why would they accept a big hit to profits?

It isn't fair for consumers to face high prices at a time when the country is in crisis, according to RenewableUK.

The long-term price is likely to reflect the short-term loss of profits, according to those close to the discussions.

Long-term fixed-price contracts would ensure huge profits for electricity companies for years to come, according to the Shadow Climate Change Secretary.

Let's be clear about this proposal: It would lock in massive windfall profits for these electricity generators.

We can have much higher prices over the next 15 years if we accept slightly lower prices now.

It would be terrible for the British people and terrible for bill payers.

If there are unexpected windfalls, the right thing to do is to impose a windfall tax.

Liz Truss pays private companies billions of pounds in excess profits from the public purse even though she is against windfall taxes.

She has to hold her nose and impose a tax if a solution isn't found, and if she does, she might go after the billions of profits the companies have already made.