Firms inundated with calls from customers as bosses fear impact of October’s second price cap increase.
Energy bosses have told MPs that they fear as many as 4 in 10 people could fall into fuel poverty when the price cap increases again this autumn, and, have called for more government support for vulnerable households who are facing a ‘truly horrific winter’.
The Chief Executive of E.ON UK, Michael Lewis, said that between 30% and 40% of people in Britain are likely to fall into fuel poverty this October when the industry regulator, Ofgem, is again expected to put further increase on the annual energy tariff limit.
“We are expecting a severe impact on customers’ ability to pay”, he said to MPs at the business, energy and industrial strategy select committee in parliament, adding that he expected debts of customers to rise by 50% – the cumulative equivalent of £800m.
He went on to say that a larger number of people falling into fuel poverty would lead to a significant increase in bad debt.
Customers have been calling providers in their thousands to express their concerns at the huge increases to their energy bills; Scottish Power alone have received over 8,000 calls from customers who’re concerned about their ability to pay, Keith Anderson, its Chief Executive, told MPs.
He told MPs that he was “massively concerned” for people facing rising bills who would “really, really struggle” and called for the introduction of a £1,000 deficit fund or social tariff for vulnerable customers.
The fund would take £1,000 off the bills of the poorest people in the country in October and, he suggested, the government or consumers would then pay this off over 10 years.
“Come October that’s going to get horrific, truly horrific,” said Anderson. “It has got to a stage now where the size and scale of it is beyond what I can deal with, beyond what I think this industry can deal with. I think it needs a massive shift, a significant shift in the government policy and approach towards this.”
The Chief Executive of EDF, Simone Rossi, said it had seen a 40% increase in calls from customers worried about debt.
“We are concerned about what is in front of us,” he said. “Unfortunately, pre-payment customers are being hit first. We now see bills being higher for longer, so I would expect government to reassess in short order to see what is possible.”
Gas prices in particular have surged massively in recent months, prompting almost every household energy supplier to raise its prices to the maximum allowed. However, some consumer groups have argued that the energy companies have increased prices by more than they have needed to, to strengthen their own balance sheets at the expense of their customers.
As a result, Jonathan Brearley, the Chief Executive of Ofgem, has said that the increases in fuels bills will be investigated to ensure that suppliers aren’t charging households unfairly.
He told BBC Radio 4: “We’re going to take a close look at those direct debits. We’re going to make sure that they are raised fairly – clearly prices have gone up – and if they haven’t been we’ll take action and make sure companies put it right.
“You shouldn’t take more than is necessary. You shouldn’t be building up a credit balance.”
He said price increases must be brought in “reasonably and fairly” and not for “other reasons outside of the customer interest” and that energy companies should be ringfencing customer money so that it’s only used to pay for their gas and electricity and nothing else.
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