Key facts
- Energy UK urged immediate government action to address rising energy bills.
- Forecasters predict a 16% increase in domestic energy prices in January.
- The typical annual energy bill could rise to £1,999 according to consultancy Cornwall Insight.
- Customer debt adds an average of £67 a year to everyone's bills.
- Energy UK proposed targeted support, a debt relief scheme, and removal of levies from electricity bills.
The government is facing mounting pressure from energy suppliers to take immediate action to help households struggling with rising energy bills this winter. Energy UK, the suppliers' trade body, warned that inaction could lead to a deeper and more costly crisis, citing forecasts of a significant increase in domestic gas prices in January.
Forecasters predict a 16% rise in domestic energy prices in the new year, potentially affecting 20 million households on variable tariffs subject to regulator Ofgem's price cap. Consultancy Cornwall Insight forecasts that the typical annual bill could climb to £1,999. This follows a 4% increase in October, which added approximately £60 annually to typical household bills.
While acknowledging some government support, such as the cut in VAT on electricity bills and the cancellation of some levies, Energy UK stated these savings have been negated by high wholesale prices. These wholesale prices are partly attributed to international events, including conflict in the Middle East and disruptions in the Strait of Hormuz, echoing the drivers of price surges in 2022 due to Russia's invasion of Ukraine.
Dhara Vyas, chief executive of Energy UK, emphasized the need for urgent intervention, highlighting growing customer debt which adds an average of £67 per year to bills. Simone Rossi, CEO of EDF Energy, also warned of a "second energy crisis" looming. Vyas cautioned that last-minute interventions risk being poorly targeted and more expensive for everyone.
Energy UK is advocating for several government measures, including targeted support beyond the existing Warm Home Discount, the introduction of a discounted social tariff, a debt relief scheme for severely affected households, and the removal of more levies from electricity bills.