One of the country’s leading energy bodies has written to the Chancellor Nadhim Zahawi, urging the Government to work with industry and financial institutions and bring in a deficit tariff scheme to keep bills down this winter.
It believes that Government-backed loans could help bridge the difference between today’s energy prices and expected hikes over the coming months.
The energy body suggests that bills could be eased throughout 2023, with costs instead spread over a longer 10-15 year period.
Businesses are not sheltered from rising wholesale costs by a price cap, and instead agree long-term contracts with suppliers, which have spiked sharply in line with soaring gas prices.
Clean energy specialist Squeaky has estimated industry energy bills will climb to an eye-watering £50bn in 2023, more than doubling this year’s total.
Energy UK has also urged the Government to set up an expert energy panel to look at ways of keeping bills affordable for both domestic and non-domestic customers over the longer-term.
While the Government unveiled a £15bn Energy Bills Support Scheme back in May, offering households a £400 discount, this was based on energy bills rising to the comparatively lower £2,800 per year this winter.
Since then, wholesale costs have spiked amid continued supply disruption, raised fears Russia will turn off the taps into Europe and challenging developments such as droughts in Norway and nuclear outages in France.
In October, the energy price cap is now expected to rise to at least £3,500 per year.
There are also multiple forecasts that the energy price cap will climb above £4,000 next year and that energy bills will remain ultra high into 2024.
Some consultancy groups even predict the cap could peak above £5,000, with Auxilione forecasting the cap will hit £5,600 per year next April.
The body has urged Downing Street for the Energy Bills Support Scheme in line with the ltest
It believes this will be the most practical way of providing the support urgently needed by customers ahead of Christmas.
Contrary to oil and gas producers, most energy retailers have been suffering losses since the pandemic, while nearly 30 suppliers have gone bust amid a market crisis.
Energy UK warned the scale of support needed in the face of record bill rises is far beyond what the retail sector can provide.
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.
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.”
Currently, energy policy is covered by the Department for Business, Energy and Industrial Strategy.
Energy UK has further suggested Downing Street should consider spinning off a new dedicated Department of Energy to tackle specific issues in the sector.