Households will be unable to cope with a huge spike in energy bills this winter unless the Government steps in to provide more support, argued Simon Oscroft, co-founder of So Energy.
He warned: “The upcoming increase in energy bills this October, due to rises in global wholesale gas prices, is unprecedented and it is simply not feasible for households to bear the brunt of these costs.”
Oscroft has called for the Government to “urgently step in” to provide further support for households,
He suggested the Energy Bill Support Scheme should be doubled to £800 for all households, and that the Warm Home Discount quadrupled to £600.
Former Chancellor Rishi Sunak unveiled a £15bn support package in May to combat the energy crisis, including £400 per year for all households.
However, this was based on the price cap would rise to £2,800 per year, however a Russian squeeze on European energy supplies and supply shortages in Europe have seen forecasts rise dramatically in recent weeks.
It is now widely expected the energy price cap will climb to £3,500 in October when Ofgem makes it announcement later this week, and potentially breach £6,000 per year next Spring.
Oscroft believed this hike meant the “goalposts have significantly shifted.”
He said: “The simplest, quickest and most targeted way to do this ahead of October would be to use existing mechanisms…Crucially, this approach will ensure discounts are applied directly to energy bills and will ensure the most vulnerable receive considerably more support. “
The energy chief also joined industry calls for a proposed tariff deficit scheme – first mooted by industry association Energy UK and backed by multiple suppliers including Scottish Power and Utilia Energy.
He suggested the Government “should seriously consider” the proposal, which would mean state-backed loans being used to keep bills down throughout next year by covering the increased cost of wholesale energy for suppliers.
This would allow prices to be spread over a much longer period of 10-15 years.
Oscroft explained: “The question we now face as a nation is what is the fairest and most sustainable way of paying for this energy. That is why the Government needs to step up its support as we have outlined above, ensuring that we can pay this once in a generation energy bill, but in a way that spreads the cost over a long period of time.”
He also outlined that the retail market’s ability to help customers further was limited, with wholesale costs already hitting suppliers – meaning they were already absorbing losses to supply energy to people’s homes.
Unlike oil and gas producers, which have been raking in record quarterly profits from soaring commodity prices, suppliers have been force to buy supplies at increasingly high prices to pass on to consumers.
This is reflected in the rising price cap, which is expected to climb above £3,500 per year for October following the next announcement on Friday – with bills set to rise to £6,000 per year next Spring.
Oscroft noted recent research from York University, revealing that April’s price cap rise dragged 27m people in 10m UK households into fuel poverty.
In October, the projected rise will drag a further 30 per cent into fuel poverty, increasing levels to 35m people in 13m domestic homes, representing nearly half of the whole population.
He concluded: “We know this is a tough time for many of our customers, which is why we are doing all we can to help them.”
In the last 12 months, So Energy has expanded its customer support team by 40 per cent, and has regularly revised payment plans.
So Energy is a renewables only supplier – home to over 300,000 customers.