Energy trade body urges immediate government action on rising bills

The trade body representing energy suppliers has called on the government to implement immediate measures to assist households struggling with winter energy costs. Energy UK warned that a lack of intervention in the face of rising domestic gas prices and forecasts of significant increases in January could precipitate a longer-term, more costly and deeper crisis. The organisation stated that the current trajectory mirrors the conditions that led to the energy crisis of 2022, urging policymakers to heed the lessons from that period rather than waiting for a similar scale of emergency to develop before acting.

Recent data indicates that the financial burden on consumers is intensifying. Households in England, Scotland and Wales on variable tariffs subject to the regulator Ofgem’s price cap faced a four per cent increase at the start of October. This adjustment equates to an additional sixty pounds per year, or five pounds per month, for the typical household using both electricity and gas and paying by direct debit. If this level were sustained for a full year, the annual bill would reach 1,723 pounds. However, forecasts suggest a far steeper rise is possible in the coming months. Consultancy Cornwall Insight has predicted that the same typical annual bill could climb to 1,999 pounds by January, representing a sixteen per cent rise for the twenty million households affected by the price cap.

Energy UK acknowledged that the government has already introduced certain forms of support, including the reduction of value added tax on electricity bills and the cancellation or shifting of some levies into taxation earlier this year. Nevertheless, the trade body argued that these savings have been effectively wiped out by high wholesale prices paid by suppliers. These wholesale costs have been driven up in part by international events, specifically conflict in the Middle East and the disruption to shipping through the Strait of Hormuz. Dhara Vyas, chief executive of Energy UK, emphasised that the urgent need for intervention is highlighted by growing levels of customer debt. She noted that the cost of this debt now adds an average of sixty-seven pounds a year to everyone’s bills, a trend she described as a critical warning sign.

The trade body is calling for a range of specific government measures to address the situation. These proposals include targeted support beyond the existing 150 pound Warm Home Discount, which would eventually lead to the introduction of a discounted social tariff. Energy UK also advocates for a debt relief scheme for the most severely affected households, aiming to prevent further debt build-up among new tenants and homeowners. Additionally, the organisation suggests removing more levies from electricity bills and shifting them to taxation as part of a wider move towards electrification. Simone Rossi, the boss of supplier EDF Energy, recently warned that the UK was walking into a second energy crisis, a sentiment echoed by Vyas, who cautioned that last-minute emergency interventions risk being badly targeted and costing everyone more.

Adam Scorer, chief executive of the charity National Energy, agreed with the analysis presented by Energy UK. He stated that the increase in debt is not simply a matter of more people getting into debt, but rather more poor people reaching more serious levels of debt. He argued that without addressing this issue, there is no way forward for households who cannot see their way beyond debt. Prime Minister Andy Burnham, speaking at the Labour Party conference, acknowledged the severity of the situation. He stated that he would not describe Rossi’s crisis warning as an overstatement, noting that the cost of home energy, along with petrol and diesel, was very difficult indeed. The Prime Minister confirmed that the government is considering any measure that can give people breathing space and take the pressure off.