A £1 BILLION fuel-poverty package set to be unveiled next week by the government was thrown into disarray this weekend after four of the “big six” utilities refused to sign up to the deal.

Baroness Vadera, one of Gordon Brown’s most trusted political fixers and undersecretary of state at the Department for Business, Enterprise and Regulatory Reform, is leading the talks.

She was in crisis negotiations with executives from Britain’s foreign-owned utilities - France’s EDF, Eon and Npower of Germany, and Scottish Power, which is owned by Iber-drola of Spain - in an effort to rescue the package. Domestic providers Centrica and Scottish and Southern Energy (SSE) have agreed to the scheme.

The proposal would secure a commitment that the utilities would plough £750m over five years into a three-pronged fuel-poverty package. This would be in addition to the £225m that the industry pledged earlier this year.

The government is under extraordinary pressure to address the matter after Scottish Power and Npower last week became the last of the energy firms to push through a second round of big price rises. Well over 5m households have been pushed into fuel poverty, defined as those who spend more than 10% of their net income on energy bills.

The four companies holding out are understood to be concerned that voluntarily signing a deal to hand over hundreds of millions of pounds will have implications for them in their home markets. Despite this, the government expects to unveil the package on Wednesday.

The £750m committed by the utilities will be distributed in a one-off, targeted winter-fuel payment, as well as an extra £200m over the next three years to be invested in the Cert scheme, which requires companies to invest in carbon reduction and energy-efficiency measures such as home insulation. The third leg of the plan would be a public-awareness campaign, which would be in part funded by taxpayers, to alert consumers to energy-saving options and services, including free loft insulation for the elderly.

The £750m figure is meant to be equivalent to the money that would have been raised if the government had forced companies to pay for more of the carbon-emissions permits they are granted under the current phase of the European car-bon-trading scheme, which runs for five years to 2012. Most of these are now given away.

The idea of auctioning more permits was floated earlier this month but abandoned because it was impractical. It would require a public consultation and European Commission approval. The EC is also understood to have opposed the idea.

The carbon permits that utilities receive equate to billions in extra revenue because their value is already priced into energy tariffs.

SSE, meanwhile, has been knocked out of the £2 billion auction of Viridian, the Northern Ireland utility.

The company had been seen as a favourite to buy Viridian, but did not make it past the second round of bidding after offering less than £1.5 billion for the business, well below the price that Arcapita, the Bahrain investment group that owns it, is hoping to fetch for the electricity and gas group.

Endesa, RWE and a consor-tium of International Power and Bord Gais Eireann, as well as at least one financial buyer, are still in the running.

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