Energy bills could soar even higher as customers face forking out to run collapsed firm Bulb.
Business Secretary Kwasi Kwarteng admitted he did not know if the £1bn-a-year cost would fall on a buyer for the firm, the Treasury, or all customers’ bills.
Raising bills to cover the costs of propping up Bulb Energy, which failed in November, would be another blow to Brits as bills hit £2,800 a year this winter.
But in a glimmer of hope, Mr Kwarteng also suggested electricity bills could be cut in future, by no longer pegging them to the price of gas.
He said: “It cannot be the case forever that we can link directly our electricity prices to gas prices when gas is only a portion of the electricity generating mix.”
Annual electricity and gas bills are already expected to hit £2,800 a year from October as the price cap is raised.
Alongside this, the £2.7bn cost of 28 suppliers collapsing will be spread across customers' bills nationwide - adding about £94 per home.
But Bulb - which is being run by a government-funded administrator costing £1bn a year - is outside this process.
In 2021/22 the government spent £0.9bn on an administrator to run Bulb Energy and has budgeted another £1bn to run it in 2022/23.
A deadline for buyers to bid for Bulb is due on Thursday.
Asked if the costs would be absorbed by Bulb’s buyer, the Treasury, or spread across customer bills, Mr Kwarteng told the Commons Business, Energy and Industrial Strategy Committee: “We're getting ahead of ourselves because we don't know what the actual deal will be.”
Pressed on whether all bill-payers in the country would have to share the costs, he added: “I’m not prepared to comment either way on that”.
His department’s top civil servant, permanent secretary Sarah Munby, told MPs: “The default expectation has always been in the past that it would go on consumers’ bills at a timing to be selected, as a matter of policy at the time.
“Clearly, we will have to see what happens in this case… it isn't a kind of automatic process.”
Mr Kwarteng said he did not know, but insisted: “My understanding is slightly different.
“I don't think there's any assumption that the costs will be absorbed [by customers].
“It's a completely different set of circumstances.”
Committee chairman Darren Jones warned support for Bulb had been worth £600 for each of the collapsed firm’s 1.6million customers.
It came as Mr Kwarteng defended the UK’s plan to extend steel tariffs by two years to prevent cheap imports of foreign metal.
"Every single G7 country produces steel and every single one of them support those industries,” he said.
“The reason they support it is because it's strategic.
"If everyone else is supporting a strategic industry, I think there is a strong argument for us in this country to do so."
Mr Kwarteng also said “it’s not clear to me one way or the other” if the Tory windfall tax on oil and gas giants will be extended to electricity generators.
The top Tory, who’d opposed a windfall tax, insisted he had only been against a “vanilla windfall tax” and the plan imposed by Chancellor Rishi Sunak was difference.
