British Gas owner Centrica PLC (LSE:CNA) is in talks to secure billions of pounds in extra credit to meet ballooning collateral demands as a result of extreme volatility in energy markets, with the government set to announce its plans to deal with the crisis later this week.
The FTSE 100 group’s request for additional short-term financing is “pre-emptive” in case the situation deteriorates, the Financial Times reported.
“Centrica’s request for additional funding from banks may heap pressure on Liz Truss, the incoming UK prime minister, to consider additional short-term financing help for the energy sector”, the newspaper report added.
Meanwhile, Truss's potential plans to help lower businesses' energy bills were being reported by Bloomberg as costing an estimated £40bn on top of the mooted plans to freeze household energy prices.
Two options are being considered for launch in October by Truss's team ahead of her getting the keys to Number 10 Downings Street today: the first being a guaranteed unit price would be set for businesses to pay, with the second option being to set a percentage or unit price reduction that all energy suppliers must offer firms.
Bloomberg said the government would agree to reimburse energy suppliers for their losses and the price of energy charged to businesses would be reviewed quarterly.
On Centrica, Victoria Scholar, head of investment at Interactive Investor, said “perhaps the energy giant is attempting to impose political pressure on Truss who could announce a type of financing support for Centrica and others as part of her plans to tackle energy in her first course of action as PM.”
The government is set to announce its plans to deal with the energy crisis on Thursday.