The heads of the biggest gas and electricity companies are being ordered by the Government to hand over part of their multi-billion pound profits - or face a new windfall tax.
The Sunday Telegraph has learnt the chief executives of the utility giants have been summoned to Downing Street and given a dressing-down over the soaring sums being made from millions of customers.
They are being told that, unless they agree to subsidise a new nationwide "fuel poverty" scheme aimed at the 4.5 million poorest households, a levy will be put on their profits. It is understood that the fuel poverty programme is to be unveiled by Alistair Darling, the Chancellor, as part of the Budget on March 12.
The Government has moved to curtail what is increasingly seen as "excessive profiteering" by the utilities industry, with customers having to pay soaring household gas and electricity bills.
This comes only weeks after the major energy providers raised prices by as much as 15 per cent. The biggest utility, Centrica, recently announced a £571 million profit from its residential energy business British Gas, which serves 16 million customers.
Campaigners have demanded action against the big utilities, with the union Unison and the National Right to Fuel Campaign describing their profits as "obscene".
The series of Downing Street summits, which are being held over a seven-day period spanning this weekend, reflects frustration in Whitehall about the way the Government - rather than the profit-laden utilities - has become a focus for consumer anger over the failure to control sky-high energy prices.
Last week, the chief executives of Scottish & Southern Energy, the country's second-largest provider, and Npower, the fourth-biggest, were ordered to attend meetings in Downing Street. The Government was represented by Yvette Cooper, the Permanent Secretary to the Treasury, Malcolm Wicks, the energy minister, and Geoffrey Norris, a No 10 adviser.
Over the next few days, they will be followed by their counterparts at Centrica, Scottish Power, E.On and EDF Energy, which owns the former London Electricity business.
The threat of a windfall tax on profits comes a week after Ofgem, the energy regulator, announced an inquiry into competition.
The Government's move reflects a broader hardening in the stance of industry regulators towards the utilities. National Grid, the company that distributes energy across Britain, was fined £41 million by Ofgem last month for allegedly restricting competition in the domestic gas meter market.
National Grid has said it will appeal against the fine, which was among the largest ever imposed on a British company.
Dave Prentis, the Unison chief, said: "Hard-working families are desperately worried about increasing fuel bills. Pensioners are finding it a huge struggle despite winter fuel payments that have been wiped out by these greedy companies."
Lesley Davis, the chairman of the Right to Fuel campaign, claimed energy company profit margins had soared by £2.5 billion in the past three years.
Charities, including Age Concern, Help the Aged, Save the Children and Barnado's, have expressed their concern at the social implications of rising fuel bills.
The major energy companies mounted a fierce defence of their profits and record at supporting poorer consumers.
A British Gas spokesman said its "social tariff", called Essentials, aimed at poorer consumers, had 340,000 customers, with a target to extend it to 750,000.
"To offer further help for up to 25,000 of our most vulnerable customers, British Gas has launched a winter protection package, called Winter Warmer, which includes a rebate of up to £90 and free insulation."
One utilities industry executive said the investment required to overhaul Britain's ageing power stations and other spending on infrastructure would be up to £50 billion during the next decade.
"The Government makes more money out of the energy industry than the companies do because of the tax burden it has placed upon them," said the source.
A Treasury spokesman said: "Taxes are a matter for the Chancellor during the Budget process."
Allan Asher, of the consumer watchdog Energywatch, welcomed the Government's action, but said: "They have left it far too late.
"Companies have been abusing consumers for too long while the Government has stuck its head in the sand. Companies are profiteering from the poor and it is outrageous and immoral."
He claimed tens of thousands of people die every winter from hypothermia and respiratory diseases because they cannot afford adequate heating.
Iam appalled at this government why does it allow gas electric and other fat cats to make such a massive profit when the working man from his normal low wage and pensioners have to sub these parasites fat cats can just give them selfs a thirty five percent rise it is disgusting.
Nobody has a problem with making a reasonable profit, but we are not talking about non-essential items.
Fuel and water are basic needs and not readily available except through purchase in the society that we have built. That being the case it is the moral and social responsibility of whoever controls supply to ensure that it is affordable by the masses and not to cause hardship in the way they do so.
With the levels of profits being made they could easily reduce prices AND still make the aforementioned reasonable profit.
What gross ignorance. Businesses can't subsidize the poor; their customers will. Where do these clowns think that business gets its money from? Personally, I wouldn't want to live in a country where my energy companies didn't make a profit. And these idiots wouldn't want to either!
No it is not the responsibility of shareholders and customers to subsidize poor people but it is the job of government.
With the privilege of being top dog in any given society MUST come responsibility to those against whom the deck is stacked. Otherwise we are nothing but brutes. No part of society rises to the top without the say-so of the rest. At this time in human history we have given all to business & they claim they're sole responsibility is to make profits. We are brutes.
The article reports of a cold winter in Britain. But isn't the world in the throes of man-made global warming? Shouldn't we all be using less fuel to keep warm?
Wow! Move to Venezuela! The government pimps coming up with this plan would fit right in. Viva Chavez!
I do not believe that industry should 'subsidize' the poor. I do believe that industry has a responsibility to society at large. I believe that responsibility extends to the point where industry must regulate its profits. At such a time as now where energy companies are benefiting from the imperial American war in the Middle East as evidenced by the enormous profits they are making that they must reduce prices and limit the profits coming as a result of this illegal and immoral war. They should easily be able to redirect a significant portion of these war profits, either in the form of rebates or certainly lower prices across the board. Beyond the energy industry, all business must reassess its philosophy of increased profit at the expense of quality and affordable products.
Yet another gimmick from a desperate government that as usual will try to claim the credit for something that others are forced to pay for. The majority will see their utility bills increase even more so that those who don't work (and who are already getting a lot in benefits) pay less.
its not exactly business subsidising the poor more like the customers who are obviously been overcharged. bet you government doesnt really mind about the high prices, wonder how much they have got in tax already from it.
Translation: Greed or compassion? Tough choice...
Whilst it is the poorest who are suffering most, these profits come from the payments we have ALL made to the energy companies. Surely a simple cap on increases (0% for the next two years, then in line with inflation for the next five? Pick your favourite numbers here) would help? It still means we have to pay the current charges but would guarantee bringing the fuel costs back in line in due course.
Once upon a time having gas and electricity was a luxury. That is no longer the case. I think they should be nationalized. If there is a profit to be made it should go back to the people.
The vulnerable folks who are struggling with these ever increasing utility bills include a great many pensioners and they don't ask for hand-outs from their fellows - just an adequate state pension. I have recently been assisting a relative to claim some pension credit. The form filling was a nightmare with the same questions being asked in several different ways. In all it took four months to get them a little extra cash and meanwhile they had to pay two fuel bills. When is this government going to look after our elderly?
This goverment has taken us to breaking point as a society through excessive profitering for business at the expense of the the populous. Energy extortion is but a minor piece of extreme tax burden this goverment has saddled us with.
The framing of your question is flawed. Profit is theft. It is irrational that so few swindle so much from so many and that they are protected by laws written by self-interested profiteers.
This so-called Labour government have also changed the rules of when women receive state pension. I am a 50 year old woman and have been working full-time since the age of 16. I thought I would be retiring at 60, but the age at which I am to receive state pension has risen to 65. Why was I not told this when I was 20?
I agree in principle but what worries me is that many working people miss out on such schemes. Working people have lost out under Labour and in my opinion it is this group that is currently struggling....I know I am. Too much help for those who don't work and not enough for those fighting a new wave of stealth taxes to pay for it all. We are finding it harder year on year yet we are working harder year on year.