Key facts
- The quarterly energy price cap in Great Britain will increase by 13% from Wednesday, reaching £1,862 annually for an average household.
- Consumer energy debt has reached a record high of nearly £4.8 billion, with an increase of £240 million in the last three months.
- Rising wholesale energy prices, attributed to disruptions from the war in Iran affecting oil and gas shipments, are driving the bill surge.
- Good Energy has proposed reforms to cut household costs by up to £270 annually and suggested shifting policy support costs from energy bills to general taxation.
- The government has implemented measures including a £150 reduction on energy bills and extended the warm home discount to 6 million households.
Ministers are under increasing pressure to address soaring energy costs as Great British households prepare for a 13% increase in their quarterly energy bills, effective from Wednesday. This rise, which will bring the average annual cost to £1,862, follows recent data revealing record highs in consumer energy debt, now nearing £4.8 billion.
The surge in wholesale energy prices, exacerbated by disruptions to oil and gas shipments via the Strait of Hormuz due to the conflict in Iran, will now be passed on to consumers. This marks the steepest rise in summer bills in four years, with the elevated prices expected to persist until the next price cap adjustment in October.
Nigel Pocklington, CEO of Good Energy, described the situation as a "financial nightmare" and urged for urgent reform of the energy market to create a cleaner and more affordable system. He called on the next prime minister to outline a plan to move away from high gas prices permanently.
Good Energy has put forward a proposal that, combined with existing government measures, could reduce annual household bills by £270. The company advocates for shifting the costs of supporting government policies from energy bills to general taxation and increasing payments through the warm home discount scheme for vulnerable households. This would cost the Treasury approximately £10.1 billion but could save typical bill payers £76 annually and vulnerable households £376 annually.
Furthermore, Good Energy has joined calls for the government to decouple electricity prices from gas by creating a strategic reserve for gas plants. Under this plan, gas generators would be paid a fixed rate to operate only as a last resort, potentially saving households up to £60 per year. Greenpeace and consultants at Stonehaven also support this initiative.
A government spokesperson acknowledged the measures already taken, including a £150 reduction on energy bills and the extension of the warm home discount. The spokesperson emphasized the government's commitment to increasing homegrown energy and taking decisive action to reduce the influence of gas on electricity prices to better protect consumers.