Scottish Power chief executive Keith Anderson has urged the government to introduce a deficit fund before this winter – when energy bills are expected to rise to painful new highs.
Anderson proposed that £1,000 could be taken off bills for energy users deemed vulnerable and in fuel poverty, which would then be repaid over a ten-year period when markets would hopefully have calmed down from historic levels of volatility.
He said: “I think the problem’s got to the size and scale that it requires something significant of that nature where those people who are deemed to be in fuel poverty or vulnerable need something of the size and scale that puts their bills back to where it used to be before the gas crisis.”
Anderson described this as “stage one”, which should be followed up with a social tariff that gives lower-income households discounted energy.
This would replace the current price cap, was hiked to £1,971 per year this month – an eye-watering 54 per cent increase to reflect soaring wholesale costs, which have skyrocketed over the past six months.
Following Russia’s invasion of Ukraine, there are growing expectations of a further increase in October, with Cornwall Insight forecasting a 34 per cent rise to £2,599 per year.
This would mean energy prices would have more than doubled over a 12-month window.
With energy users footing the bill for industry carnage which has seen 29 suppliers crash out of the market since September, while Bulb Energy has fallen into de-facto nationalisation, there are growing concerns over whether vulnerable energy users will be able to afford to heat their homes.
Government urged to do more to help households
The energy chief outlined his views alongside industry leaders to the Business, Energy and Industrial Strategy (BEIS) Committee.
He was speaking alongside EDF chief executive Simone Rossi, Centrica chief executive Chris O’Shea and EON chief executive Michael Lewis.
EON boss Michael Lewis was also in favour a social tariff, but additionally called for the government to bring in measures to deal with the immediate crisis.
He said: “In short term, government needs to do more.”
This included removing environmental levies and placing the fees into general taxation, cutting VAT to zero and extending the Warm Home Discount – which provides a £140 annual saving to 3m households.
He described these proposals as “tangible things” that can be achieved before the increase in October.
Lewis also suggested that the government needed to focus more on energy efficiency, and argued the recently released energy security strategy should have been accompanied by an energy demand strategy.
Reducing household energy usage through boosting insulation across the country’s housing stock could cut down energy bills, with UK homes among the least efficient in Europe.
He explained: “These are things we can do quickly. These are things we can ramp up for vulnerable customers very quickly, and we were very disappointed the government did not address that directly. That actually is the silver bullet for solving some of our short-term problems – a massive investment in energy efficiency. “