Suppliers pile pressure on government over energy bills
Immediate action is needed to help households struggling with bills this winter, says trade body Energy UK.
**Suppliers increase pressure on government over energy bills**
The government should act at once to help people struggling with energy bills this winter, the suppliers’ trade body has said.
Energy UK said domestic gas prices, which rose on Thursday, and forecasts of sharp increases in January meant that failing to act would create a longer-lasting, more expensive and deeper crisis.
Figures disclosed by the BBC earlier this week showed forecasters expecting a 16% rise in domestic energy prices in the new year for 20 million households on variable tariffs affected by regulator Ofgem’s price cap.
Prime Minister Andy Burnham said the government was considering any measure that would ease the pressure.
Households in England, Scotland and Wales on variable energy tariffs set by Ofgem’s price cap, which sets a maximum price for each unit of gas and electricity, were hit with a 4% increase at the start of October.
That works out at about £60 a year - or £5 a month - taking an annual bill to £1,723 for the typical household using both electricity and gas and paying by direct debit if that level were maintained for a year.
But forecasts indicate a much larger rise could be coming for January bills. Consultancy Cornwall Insight said its latest forecast suggested the same typical annual bill would increase to £1,999.
Energy UK said it accepted that the government had already offered some support. VAT on electricity bills was cut on Thursday, and some levies were removed or moved into taxation earlier this year.
However, the trade body said those savings had been erased by high wholesale prices paid by suppliers, driven in part by international events - namely conflict in the Middle East and disruption to shipping through the Strait of Hormuz.
It said bills were climbing as they did in 2022, when they were pushed up by the impact of Russia’s invasion of Ukraine.
"We cannot afford to wait for the same scale of crisis before acting again. We must heed the lessons from that time," said Dhara Vyas, chief executive of Energy UK.
She said the need for urgent intervention was underlined by rising levels of customer debt, the cost of which now adds an average of £67 a year to everyone’s bills.
On Thursday, the boss of supplier EDF Energy, Simone Rossi, warned that the UK was "walking into a second energy crisis" and Vyas said action was needed before bills rose again.
"Last-minute emergency interventions run the risk of being badly targeted and costing us all more," she said.
Energy UK is calling for government measures including: targeted support above and beyond the £150 Warm Home Discount, given to people on benefits, which would eventually lead to the introduction of a discounted social tariff a debt relief scheme for the most severely affected households as part of a strategy that will also help prevent debt build-up among new tenants and homeowners removing more levies from electricity bills and shifting them to taxation, as part of a wider move to electrification
At the Labour Party conference last week, Prime Minister Andy Burnham told the BBC that he would not describe Rossi’s crisis warning as an exaggeration, adding that the cost of home energy, as well as petrol and diesel, was "very difficult indeed".
"We're looking at any measure that can give people breathing space, that can take the pressure off," he said.