UK to extend energy bill help for 3 months - source

Britain's Chancellor of the Exchequer Jeremy Hunt walks at Downing Street in London

LONDON (Reuters) -Britain's finance minister Jeremy Hunt is expected to extend support for household energy bills by an extra three months beyond April, a government source said on Friday, in a move that would help ease the country's cost-of-living squeeze.

Government subsidies are scheduled to be scaled back from next month, meaning average annual bills would rise to 3,000 pounds ($3,600) from 2,500 pounds now.

But the government source said the lower bills are now expected to be kept in place until the end of June, confirming a story reported by the Times earlier on Friday.

Hunt is due to deliver a budget statement on March 15, when any extension to the level of support could be announced.

"The Chancellor has been clear that we will keep all our support under review... we are already doing all we can to support people struggling with high energy bills," a spokesperson for prime minister Rishi Sunak said on Friday.

Opposition parties and campaigners have urged the government to change course and keep providing its current level of help to households, many of which are struggling to meet the rising cost of living even before bills rise.

Hunt can count on a roughly 30-billion-pound windfall as he prepares his budget, according to the Institute for Fiscal Studies (IFS).

Keeping the current level of energy subsidies would cost 2.7 billion pounds until the end of June, based on current energy price forecasts, the IFS estimated this week.

Under the government's energy price guarantee mechanism, which was set up last September, taxpayer money has been used to shield households from the surge in prices that followed Russia's invasion of Ukraine.

Wholesale prices are expected to fall over the three months from April to June meaning the government's guarantee will no longer be necessary beyond after that period, said The Times in its story, citing a Whitehall source.

Energy companies, which could include Centrica, Scottish Power and E.ON, are already preparing to amend bills to reflect the current level of support being renewed rather than reduced in April, according to a separate report by the BBC on Friday.

($1 = 0.8347 pounds)

(Reporting by Sarah Young and Elizabeth Piper, additional reporting by Farouq SuleimanEditing by William Schomberg and Toby Chopra)