Suppliers pile pressure on government over energy bills

Energy suppliers are urging the government to take swift action to alleviate the financial strain faced by households struggling with rising energy bills this winter. Energy UK, representing suppliers, warns that inaction could result in a protracted and more severe crisis. Gas prices, which increased on Thursday, and projections of substantial rises in January have prompted this call for immediate intervention.

According to recent estimates, domestic energy prices are anticipated to rise by 16% for 20 million households on variable tariffs under Ofgem's price cap. This equates to an annual bill of £1,723 for the average household using both electricity and gas, paid by direct debit. However, experts project a far more significant increase of up to £1999 in January.

The trade body acknowledges that the government has already provided some support, such as reducing VAT on electricity bills and canceling or shifting some levies. However, these benefits have been offset by high wholesale prices paid by suppliers due to factors like the Middle East conflict and disruptions in the Strait of Hormuz.

Energy UK's CEO, Dhara Vyas, emphasizes the need for urgent action, drawing parallels with the 2022 crisis driven by Russia's invasion of Ukraine. Growing customer debt is also adding an average of £67 annually to everyone's bills.

Energy UK is advocating for measures such as additional support beyond the £150 Warm Home Discount for those on benefits, a debt relief scheme for severely affected households, removal of certain levies from electricity bills and shifting them to taxation, and a broader strategy to promote electrification. Prime Minister Andy Burnham has acknowledged the seriousness of the situation, stating that he is considering measures to provide people with breathing space and relieve pressure on energy costs.