Household energy bills will be cut by up to £75 a year under plans reportedly being worked on by Chancellor George Osborne to change how green power projects and home insulation schemes are funded.
The Treasury wants to remove the charges for the initiatives from energy bills and instead see subsidies for green schemes paid for out of taxes, according to The Sunday Times.
It is thought the plans could be announced in the Chancellor’s autumn statement on December 4.
The Government is keen to calm public anger over rising energy costs after a series of tariff hikes announced in the past month.
Prime Minister David Cameron has vowed to look at scaling back the environmental subsidies which under-fire energy firms have blamed in part for fast-rising bills for customers.
It comes as the Government faces pressure following Ed Miliband’s pledge to freeze gas and electricity prices for 20-months if Labour wins the 2015 general election.
It is thought the Treasury is focusing efforts on removing a scheme called Eco, which offers free insulation, as well as a so-called feed-in tariff, which repays homeowners who have installed solar panels.
These are said to account for £69 and £6 of the average annual household gas and electricity respectively.
The Treasury was not immediately available for comment.
The “big six” suppliers were grilled over the recent tariff increases in a fierce hearing with MPs on the Energy and Climate Change Committee last week.
They faced accusations that they charged customers ” the maximum price they feel they can get away with” by small scale competitor Ovo Energy.
But the firms partly blamed green taxes for the recent hikes of over 9%.
The Government sought to take the heat out of the furore just days later by unveiling a package of reforms, although they were criticised for not going far enough.
Energy Secretary Ed Davey announced a new probe into firms’ accounts, increasing penalties for market manipulation, and moves to make switching supplier simpler and quicker – moving from the current several weeks to just 24 hours.