Suppliers pile pressure on government over energy bills

The government should take immediate action to help those 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 steep rises in January meant inaction would lead to a longer-term, more costly and deeper crisis.

Figures revealed by the BBC earlier this week showed forecasters predicting 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 took the pressure off.

Households in England, Scotland and Wales on variable energy tariffs set by Ofgem's price cap, which puts a maximum price on each unit of gas and electricity, were hit with a 4% price increase at the start of October.

That is the equivalent of about £60 per year - or £5 per month - taking an annual bill to £1,723 for the typical household using both electricity and gas and paying by direct debit if this level was sustained for a year.

But forecasts show a far greater increase is possible for bills in January. Consultancy Cornwall Insight said its latest forecast suggested the same typical annual bill would rise to £1,999.

Energy UK said it accepted the government had already provided some support. VAT on electricity bills was cut on Thursday, and some levies were cancelled or shifted into taxation earlier this year.

But the trade body said these savings had been wiped out by high wholesale prices, paid by suppliers, that were the result in part of international events - namely conflict in the Middle East and the disruption to shipping through the Strait of Hormuz.

It said bills were soaring as they had in 2022 when they were driven 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 that the urgent intervention needed was highlighted by growing levels of customer debt, the cost of which now added an average of £67 a year to everyone's bills.

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On Thursday, the boss of supplier EDF Energy, Simone Rossi, warned that the UK was "walking into a second energy crisis" and Vyas said that action was needed before bills jumped 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 over and above 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

Adam Scorer, chief executive of charity National Energy, which campaigns against fuel poverty, told BBC Breakfast he agreed with what Energy UK's analysis.

"[The increase in debt is] not more people getting into debt, that's more poor people getting into more serious levels of debt."

He added: "Until you do something about that, there's no way forward, there's no breathing space, there's no future for households who can't see their way beyond debt."

At the Labour Party conference last week, Prime Minister Andy Burnham told the BBC that he would not call Rossi's crisis warning an overstatement, 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.

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