Fresh rise in energy bills moves back into focus

Pressure on energy bills in the UK has returned to the forefront as winter approaches. Industry group Energy UK has urged the government to act quickly, warning that after the increase that took effect in October, a sharper rise could follow in January. According to the group, failing to intervene now could lead to a longer-lasting and more costly crisis.

About 20 million households on variable tariffs linked to the Ofgem price cap were hit by a 4% rise at the start of October. That increase pushed the annual bill for a typical household using electricity and natural gas up by about £60 to £1,723. The added monthly cost was estimated at around £5.

January forecast adds to market concern

Consultancy Cornwall Insight forecasts that the typical annual bill could rise to £1,999 in January. The estimate points to a possible 16% increase in household energy prices in the new year and has lifted market expectations.

Energy UK said it had noted government steps such as cutting VAT on electricity bills and removing or shifting some levies to taxation during the year, but argued that those gains have been largely wiped out by high wholesale energy prices. The group said cost pressures have also been driven by conflicts in the Middle East and disruptions to shipping through the Strait of Hormuz.

Debt is rising, and the sector wants targeted action

Dhara Vyas said the increase in customer debt has made urgent intervention even more necessary. According to Energy UK, the cost of accumulated debt is now adding an average of £67 to consumers’ bills.

Andy Burnham said the government is considering every option available to ease pressure on households. Simone Rossi, chief executive of EDF Energy, also warned that the country was heading toward a “second energy crisis.”

Main measures the sector wants from the government

  • Targeted extra support for people in need, beyond the £150 help under the Warm Home Discount
  • A debt-relief programme for the households hit hardest
  • Shifting more of the burden on electricity bills into the tax system

Adam Scorer, who heads the fuel poverty campaign group National Energy, said he agreed with the assessment. Scorer said the problem is not only that more people are falling into debt, but that low-income households are being pushed into deeper levels of debt.