People living near planned electricity pylons and substations are to have up to £10,000 taken off their bills over a decade, under proposals announced by Jeremy Hunt.
The chancellor will use Wednesday's autumn statement to set out the cuts in a bid to end delays to infrastructure projects over objections from so-called ‘nimby' campaigners.
But poverty campaigners warned Mr Hunt that the £1,000-a-year grant would help many wealthy Britons in the countryside, while others face a dire choice between heating or food.
Jonathan Bean, of Fuel Poverty Action, said cutting bills in areas with anti-energy project campaigns was a “poorly designed government policy, creating a huge postcode lottery” when it comes to gas and electricity bills.
“This would mean that unaffordable pricing remains for most, while a lucky few pay half as much,” the campaigner said The independent – noting that current average bills are around £2,000 a year.
“It's so misguided – there's no attempt to tackle poverty,” Mr Bean said. “It's quite crazy that some rich people in huge houses in the countryside can get a big discount when we see some people having to turn off their heating or having to go to food banks.”
Energy networks commissioner Rishi Sunak recently suggested that residents should receive “generous” compensation if they agree to new power lines near their homes.
Wind and solar farms face long delays in connecting to electricity grids due to Britain's troubled grid infrastructure – but “not in my backyard” campaigners are increasingly active to push against new pylons in their area.
Former environment secretary Therese Coffey is among senior Tories who have lobbied against a new high-voltage transmission line running from Norwich to Tilbury in Essex.
The Treasury refused to say who would pay for the planned discount on energy bills or how it could be raised to £10,000 per household over a decade.
Matt Copeland, head of policy at the National Energy Action campaign to end fuel poverty, said the compensation was “no substitute for the UK Government's support for vulnerable people with excessively high energy bills”.
He added: “Millions of households will be cold at home this winter if no further support is announced in the Autumn Statement this week.”
Fuel poverty campaigners have called for a social tariff which would see cheaper bills for those on low incomes, more action to end the forced use of pre-paid meters and an end to flat charges used by energy companies to recover the cost of providing services .
Responding to the idea of rebates in areas where there is opposition planning, shadow Treasury chief secretary Darren Jones said the Tories had run out of ideas and were now looking to Labor for solutions.
Sir Keir Starmer's party has already promised that residents who agree to new, local renewable energy projects will receive cost-of-living discounts.
The Liberal Democrats were more critical of the plan. The party's Treasury spokeswoman Sarah Olney said the plan “would create a postcode lottery system leaving millions of families still facing higher energy bills while others benefit”.
Mike Childs, head of science and policy at Friends of the Earth, said if offering financial incentives to communities can speed up connecting green energy projects to the grid “then it will be money well spent”.
However, he warned that it will not be enough to boost green energy projects. “One of the biggest barriers to increasing our domestic renewable energy production is the government's unfair planning rules, which amount to a de facto ban on onshore wind in England.”
Mr Sunak's move on the bills will come alongside plans to halve the time it takes to deliver new electricity grids to seven years, and a priority on developing electric vehicle charging points.
Officials have argued that the reforms are part of plans to boost economic growth and help the UK hit net zero after Mr Sunak faced criticism for weakening climate plans.
A new ‘premium' planning service across England will aim to speed up pre-application services for major projects in return for a fee and refunds when they are not met.
A Treasury source with knowledge of the plans said the expansion of the electricity grid would “unlock global investment for Britain and bring improvements for people across the country, with energy security that will reduce energy costs”.
The plan to boost the electric vehicle industry with more charging points comes after Hunt revealed he had spoken to Elon Musk about acquiring a Tesla factory in the UK.
Meanwhile, shadow chancellor Rachel Reeves will on Sunday unveil Labour's “best plan” to cut household bills by up to £3,000 a year.
For more than a decade, Labor has pledged to cut bills by insulating homes, creating cheaper energy, cracking down on unfair insurance practices and boosting housebuilding.
Ms Reeves said: “The economy is not working for workers. After 13 years of economic failure, families are worse off, with higher taxes, higher mortgage payments and prices still rising in stores.”