ONE OF a City chief exec’s key jobs is horizon scanning. For those in the energy sector, should they be finding their forecasting glasses a little fogged up, we’ll help: you’re about to become the least popular companies in Britain.
It is hard to over-egg how painful energy bills could become this winter, with predictions of almost £500 a month emerging yesterday. Such a hike would put millions of households into so-called fuel poverty, squeezing household incomes and battering consumer spending.
The rise in wholesale prices we’ve already seen will of course drive the (uncapped) rates that businesses pay even further, putting more inflationary pressure on the economy and driving up the cost of other non-discretionary spending. It will be bad news for everybody from ski operators in Chamonix to cinemas in Chelmsford, and there is no getting around it: it would be absolutely miserable.
Politicians will, no doubt, receive a fair share of the criticism when bills land on doormats (or inboxes). The architects of the cockamamie energy cap deserve their fair share of the blame, with the design of the ceiling meaning that whilst hikes are delayed so are falls, but today’s politicians will no doubt be criticised for a lack of ‘help’. Oil and gas companies in the North Sea have already felt the wrath of a windfall tax.
But energy companies will be dragged over the coals, too. Bosses need to start explaining, now, at every opportunity, why prices will be high over the winter and beyond. They need to be clear with customers that the hikes are largely unavoidable. And if ever there was a time to show restraint on executive pay, goodness knows this is the time to do it.
The stakes are high. When prices rise, politics can shift – and quickly. We are already hearing calls for nationalisation or further windfall taxes on energy providers.
The horizon looks rather stormy – and it’s best to buy the umbrella when you see the rain coming, not after it falls.