Ministers urged to curb energy costs as Great British homes face 13% bill surge | Energy industry
Ministers are facing increasing pressure to cut energy costs as UK households face the steepest rise in summer bills in four years this week.
The three-month cap on gas and electricity charges will rise by 13 per cent from Wednesday, to the equivalent of £1,862 a year for the average household, just days after figures revealed consumer energy debt had reached record levels.
Unpaid energy bills have risen by £240 million in the last three months to reach an all-time high of almost £4.8 billion, according to data released by industry regulator Ofgem last week.
Andy Burnham, who looks set to become the next prime minister, will face calls to tackle high energy bills as soon as he comes to power, amid fears about the impact this winter. Chancellor Rachel Reeves has previously refused to propose universal energy support that the Liz Truss government would provide in 2022.
James Mabey, policy analyst at fuel poverty charity National Energy Action, said: “The consequences of energy debt include cold homes, increased anxiety and impossible choices about basic needs. The right response is to scale up debt relief.”
While households fell further into debt, wholesale energy prices also increased due to the war in Iran, which has disrupted oil and natural gas shipments through the Strait of Hormuz for the last four months.
Until this week, the three-month price cap delayed the full impact of the crisis on household bills; However, the increase in wholesale prices will take effect from July 1 and will remain high until the next price cap comes into effect in early October.
Nigel Pocklington, managing director of supplier Good Energy, said: “Rising energy bills are becoming a financial nightmare for millions of UK households, with many people unsure of how they will afford current payments, let alone rising costs.
“We urgently need to reform the way the market works to deliver and promote a cleaner, more affordable energy system. The priority now must be to turn this into action.”
He added: “The next prime minister must set out a clear plan for how Britain will move away from high gas prices and cut bills altogether.
“There is still time for the Labor government to meet its target of reducing household bills, but doing so requires urgent action to decouple electricity prices from gas so consumers can take full advantage of lower-cost, home-grown clean energy.”
Good Energy has put forward a proposal that, combined with the government’s latest measures to cut bills by £150 a year, could cut home costs by £270 a year; This is close to Labour’s manifesto pledge to cut £300 a year from household energy bills by 2030.
He called on the government to shift the cost of supporting government policies from energy bills to general taxation and increase payments by £300 to £450 for 6 million vulnerable households through the warm homes rebate scheme.
This will cost the Treasury around £10.1bn, according to the company, and save typical bill payers £76 a year, while vulnerable households will save £376 a year.
Good Energy has also joined calls for the government to move forward with plans to break the link between expensive gas power and the overall electricity market price by taking gas power plants off the market and into a strategic reserve. Under the plans, generators will be paid a fixed fixed fee to run gas plants only as a last resort.
The scheme could save households up to £60 a year and could be delivered within two years, according to a separate analysis by consultants at Greenpeace and Stonehaven.
“This may not be the final answer,” Pocklington said, “but it shows that credible steps can now be taken to delink gas and reduce bills, while keeping the need for long-term reform firmly on the political agenda.”
A government spokesman said: “We’ve shaved £150 off the cost of energy bills for coming years and extended the warm home discount to around 6 million households.
“We are going further and faster to transition to domestic energy that we control, including taking decisive action to break the impact of gas on electricity prices, to better protect households from energy crises.”
