The body representing energy firms in the United Kingdom is calling on the government to provide broader financial support for struggling households, as the country's energy price cap is expected to reach a three-year high when Ofgem announces its October figure on Wednesday.
Energy UK, the industry trade group, said that persistently high bills have left millions of customers unable to afford their energy costs, and that record debt levels show the current support system is not working. Customers who had fallen behind on energy bills owed suppliers a record £4.7 billion at the end of last winter, according to BBC News.
Energy consultancy Cornwall Insight predicts Ofgem's price cap will rise by 4% when it is announced Wednesday. That follows a sharper 13% rise in July. The last time the cap reached a similar level was in July 2023.
The October rise is being driven in part by the conflict in the Middle East, following the start of the Iran war in February, as well as heatwaves across Europe that have pushed up demand for power generation to support air conditioning and cooling systems. Cornwall Insight said the price rise would outweigh the benefit of Prime Minister Andy Burnham's decision to remove VAT on household electricity bills starting in October.
"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," said Energy UK chief executive Dhara Vyas.
Currently, people receiving means-tested benefits are entitled to a one-off £150 Warm Home Discount over winter. The rebate is administered by energy suppliers and paid for through a levy on all energy users. Energy UK said the scheme reaches six million customers, but there are another 2.5 million people who need help because a medical condition or poorly insulated home means they consume more energy than average.
Vyas called for a "better targeted and more agile" support scheme to replace the existing one. Energy UK proposed that the government allow the combining of data on customers' income, health, and energy consumption to create a discount that could be adjusted based on changing needs and price levels.
The proposed new scheme would cost £1.9 billion, nearly double the cost of the current Warm Home Discount program, but could offer £450 in support to some households. Energy UK suggested it could continue to be partly funded through bills or shifted entirely to the taxpayer.
Vyas said a new "social discount" scheme would result in "a system that works better for everyone."
