Energy UK, the representative body for the nation's energy firms, has called on the government to intervene and provide additional support for vulnerable households ahead of expected energy bill increases this winter. The organization warned that current bills are unaffordable for millions, urging the creation of a "better targeted and more agile" support scheme.
The appeal comes just before regulator Ofgem is scheduled to announce the October energy price cap on Wednesday, which is projected to reach a three-year high. Dhara Vyas, the chief executive of Energy UK, emphasized the severity of the situation. "Suppliers continue to do all they can to help their customers but as well as persistently high bills, record levels of debt show how the current system is failing to provide the right support to those in need," Vyas stated.
According to Ofgem, customers who had fallen behind on their energy bills owed suppliers a record £4.7 billion at the end of last winter. Since then, wholesale energy prices have continued to climb, driven in part by the start of the Iran war in February.
Cornwall Insight, an energy consultancy, projects that Ofgem's quarterly cap on household price rises will increase by 4% when announced on Wednesday. This adjustment will affect household bills during the first half of the upcoming winter, following a more substantial 13% rise implemented in July. The consultancy noted that energy prices have been pressured by the ongoing conflict in the Middle East as well as summer heatwaves across Europe, which drove up electricity demand for air conditioning and cooling systems.
The anticipated price increase is expected to overshadow the impact of Prime Minister Andy Burnham's initiative to eliminate VAT on household electricity bills starting in October. To mitigate these rising costs, Energy UK proposed that a new support framework could either be part-funded through consumer bills or transitioned completely to taxpayers through direct government funding.
The last time the price cap reached a comparable level was in July 2023, though this remains below the record peaks seen in 2022 following Russia's invasion of Ukraine. During that previous spike, the Conservative government allocated approximately £40 billion in public spending to help households manage their energy costs.
Implementing a new targeted scheme, however, presents challenges. Combining personal data sources—such as income and health records—and securing additional taxpayer funding are expected to raise significant policy questions. A representative emphasized the urgency of the situation, stating, "We desperately need a new approach." They added, "There will be a lot of detail to get right, but if government genuinely wants to provide breathing space for people in fuel poverty, it needs to take this challenge on and work with energy companies and charities to design something truly fit for purpose."
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