Suppliers are urging the government to take immediate action to help households struggling with energy bills this winter. Energy UK, the suppliers' trade body, stated that current domestic gas prices and projected increases in January indicate that inaction will lead to a more severe and prolonged crisis.
Figures released by the BBC show that forecasters predict a 16% rise in domestic energy prices in the new year for 20 million households on variable tariffs subject to Ofgem's price cap. Prime Minister Andy Burnham has indicated that the government is considering measures to alleviate this pressure.
Households in England, Scotland, and Wales on variable tariffs faced a 4% price increase in October, amounting to approximately £60 annually, bringing the typical household bill to £1,723. However, forecasts suggest a more significant increase in January, with consultancy Cornwall Insight predicting the typical annual bill could rise to £1,999.
Energy UK acknowledged the government's existing support, such as the VAT reduction on electricity bills and the cancellation of some levies. However, the trade body argued that these savings have been negated by high wholesale prices, influenced by international events like the conflict in the Middle East and disruptions in the Strait of Hormuz. They noted that bills are soaring similarly to 2022, driven by the impact of Russia's invasion of Ukraine.
Dhara Vyas, chief executive of Energy UK, emphasized the urgency, stating, "We cannot afford to wait for the same scale of crisis before acting again. We must heed the lessons from that time." She highlighted that customer debt is growing, with the cost of this debt adding an average of £67 per year to everyone's bills.
Simone Rossi, CEO of supplier EDF Energy, warned of a "second energy crisis," and Vyas echoed the need for action before bills escalate further. She cautioned that "Last-minute emergency interventions run the risk of being badly targeted and costing us all more."
Energy UK is proposing several government measures:
- Targeted support beyond the £150 Warm Home Discount for those on benefits, with a view to introducing a discounted social tariff.
- A debt relief scheme for severely affected households, coupled with a strategy to prevent future debt accumulation.
- Removal of more levies from electricity bills and their transfer to taxation, as part of a broader move towards electrification.
Adam Scorer, chief executive of the charity National Energy, agreed with Energy UK's assessment, stating that the increase in debt signifies "not more people getting into debt, that's more poor people getting into more serious levels of debt." He stressed the need for fundamental changes to address this issue.
Prime Minister Andy Burnham commented on the crisis warning, acknowledging the significant difficulty posed by the cost of home energy, petrol, and diesel. He stated, "We're looking at any measure that can give people breathing space, that can take the pressure off."
