Energy UK has written to the Chancellor of the Exchequer setting out proposals for cutting the cost of energy for households over the coming winter and beyond.
The next price cap, which comes into force at the start of October, is predicted to exceed £3,500 (rising from the current £1,971), so the energy industry is calling for the Government to increase the amount that will be provided by the Energy Bills Support Scheme – up from the current £400. It believes that this will be the most practical way of providing the support urgently needed by customers ahead of Christmas.
High prices are set to persist throughout 2023, with further big increases predicted for January and April, so Energy UK’s members are also urging the Government to work immediately with industry and financial institutions on introducing a deficit tariff scheme. Government-backed loans could be used to keep bills down throughout 2023 by covering the increased cost of wholesale energy for suppliers and allowing these to be spread over a much longer period of 10-15 years instead.
The trade body is also calling for the establishment of an expert energy panel to look at ways of keeping bills affordable for both domestic and non-domestic customers over the longer term and is also asking the Government to consider setting up a new dedicated Department of Energy.
While the Government put in place a generous support scheme back in May, since then the wholesale cost of energy has continued to rise, leading to projected bill increases far in excess of what had been predicted.
Suppliers are continuing to do all they can to help customers through a range of additional support schemes and other assistance. However, the scale of the support needed in the face of record bill rises is far beyond what a retail sector that has been loss making since before the pandemic can provide. 30 suppliers have gone out of business since last August when wholesale costs started to increase sharply.
Dhara Vyas, Energy UK’s Director of Advocacy, said:
“Time is running very short ahead of October and we know many customers are already struggling after the last price rise – so the predicted increases will simply be unaffordable for millions of households.
“Given the urgency, our industry believes the most practical way to help customers ahead of Christmas will be to increase the amount of support made through the Existing Bills Support Scheme.
“However, energy bills are set to remain high for the foreseeable future so it will be crucial to put something in place that will shield customers from these. A Government backed loan scheme could help do just that by spreading the costs from an exceptionally volatile few months over a much longer period.
“The high cost of energy, driven by record wholesale gas prices that continue to rise, is unavoidable at present. Suppliers need to recoup these costs otherwise we will see more of them go out of business, adding more expenses and disruption to customers. But this way we can tackle further increases before they hit customer bills.
“We realise that this will involve both further Government expenditure as well as a very significant intervention. But we need solutions that match the scale of the problem. The consequences of leaving customers to face bills that would have been unimaginable even a few months ago demands that we do whatever it takes to help them.”