Chief executives at some of the country’s biggest energy firms have called on the government to provide struggling households with more support this winter.
EON boss Michael Lewis described the current situation as “unprecedented” and expected it would have a “severe impact” on the ability of his customers to pay their bills.
Energy users have suffered a 54 per cent hike in annual bills this month, following the latest painful update to the consumer price cap from market regulator Ofgem.
Annual energy bills have risen to £1,971 per year for average use, with expectations of further increase this October – which would see energy bills more than double over a 12-month window.
Lewis warned between 30-40 per cent of energy users could fall into fuel poverty this October, when market regulator Ofgem is expected to hike household energy bills again.
He is expecting an outstanding debt increase of 50 per cent on EON’s books by the end of the year, with total debt would increasing by £800m to £2.4bn.
Energy specialist Cornwall Insight are forecasting a 34 per cent rise to £2,600 per year, while the Office for Budget Responsibility estimates a 40 per cent increase to energy bills.
The rise in energy bills reflects soaring wholesale costs – which has spiked costs following record natural gas prices, alongside rebounding post-lockdown, supply shortages, market disruption and conflict in Ukraine.
The combination of elevated gas prices and the constraints of the price cap has also seen nearly 30 suppliers collapse since last September, directly affecting over four million customers leaving consumers with a £3bn clean-up bill.
The EON chief executive was speaking alongside the bosses from Centrica, Scottish Power and EDF to the Business, Energy and Industrial Strategy (BEIS) Committee.
Vulnerable energy users most in need of support
Scottish Power chief executive Keith Anderson also warned that customers are facing a “horrific” situation this winter.
He revealed there was a “huge amount of anxiety on the phones”, with customers calling in with concerns over rising energy prices.
Anderson believed many people are facing issues over paying heating bills for the first time, who have “never been in this position before.”
While he recognised Chancellor Rishi Sunak’s pledged £9bn rebate scheme and £350 household savings would help, it was not “nearly enough to mitigate the full impact of a price increase.”
EDF boss Rossi also reported data showing the 10 per cent most vulnerable customers in its customer base will go from spending £1 in 12 in energy bills to £1 in 6.
He explained: “Ever since the situation has worsened considerably with the war in Ukraine and turmoil in the markets. I expect government to reassess the situation in short term to see what is possible.”
Chris O’Shea, chief executive at Centrica, also noted 10 per cent of its customers are currently late in payment.
On the whole 716,000 customers were late, with an average debt of £440, this is an increase of 125,000 from this time last year.
He observed that while energy consumption “halves in the summer”, a crisis this winter was now effectively priced in.
O’Shea concluded: “It will get worse without further intervention, come October.”
Chancellor Rishi Sunak unveiled a £9bn rebate scheme in February which will provide households with a £350 saving.
This will consist of a £200 rebate and a £150 discount on council tax for homes in bands A-D.
However, there is a growing expectation he will announce new measures latest this year following the next Ofgem review in August.