Britain’s biggest energy companies are holding talks with the Government about a deal to provide subsidised heating and electricity to the 4.5 million people thought to be living in fuel poverty.

Industry chiefs have been summoned to a series of meetings in Whitehall in recent days where they have been attacked for reporting huge profits while not doing enough to help those struggling to pay bills. After the latest price rises the average household fuel bill now exceeds £1,000 a year.

Energy companies spend just 0.11 per cent of their £24 billion turnover helping to tackle fuel poverty, defined as households that spend more than 10 per cent of income on energy.

They have been threatened with a windfall tax on profits if they do not help to fund a nationwide scheme. The Government wants them to contribute to a fund and is considering matching industry payments with taxpayer contributions. The fund would allow for the creation of means-tested, standardised energy tariffs for low-income groups. Alistair Darling is expected to announce further details of the scheme on March 12.

National Energy Action, the charity, claims that half a million more households were plunged into fuel poverty earlier this year following the latest price increases. The Government’s goal of eradicating fuel poverty by 2016 has been thrown into jeopardy.

There is dissatisfaction that in the past two months power companies have been raising prices by as much as 15 per cent while reporting huge profits. British Gas, for example, reported earnings of £571 million last month. Officials within the industry say that the big six energy companies, five of which have already raised their prices this year, are moving closer to agreeing concessions with the Treasury.

“The Government is exercised about this issue and the industry does not want a windfall tax, so they are likely to agree to some kind of deal,” said a source close to one of them. “It’s easier for everyone to swallow.”

He said that the details had not yet been agreed. Other measures that have been proposed include having individual households sign long-term contracts that would encourage power companies to invest in improving energy efficiency in their homes.

Leaders of three of Britain’s biggest power groups — Sam Laidlaw, chief executive of Centrica, which owns British Gas, Paul Golby, chief executive of Powergen, and a representative from EDF, will meet Malcolm Wicks, the Energy Minister, Yvette Cooper, Chief Secretary to the Treasury, and Geoffrey Norris, the Downing Street adviser, today to discuss the proposals. A meeting was held last week with the heads of Scottish and Southern Energy, Scottish Power and RWE NPower.

Several schemes already exist to assist low-income groups, but there is no standardisation and Energywatch believes that they help only one in 15 households living in fuel poverty.

Some companies spend significantly more on the problem than others. British Gas, for example, spends 0.49 per cent of its turnover, while SSE and NPower pay just 0.07 per cent. Energywatch said in January that, if all of the companies matched British Gas’s spending, an additional £72 million could be raised to help poorer households.

Spokesmen for the Treasury and the Department for Business, Enterprise and Regulatory Reform declined to comment.

Ofgem, the energy watchdog, launched an investigation into the power and gas supply markets on February 21 because of growing public concern about rising prices, which the companies have blamed on wholesale gas prices and the need to invest more in low-carbon energy generation.

Power companies are being asked to spend billions of pounds investing in low-carbon generation over the coming years, including nuclear and renewable energy. The industry said that a windfall tax on profits would damage its ability to make investments to secure long-term energy supplies.

Profit sharing

8m Scottish & Southern Energy customers

0.7% Proportion of turnover that it spends on social tariffs

£723m Profits for first half of 2007

16m British Gas customers

0.49% Proportion of turnover that it spends on social tariffs

£533m Profits in first half of 2007

Source: Times database

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive