Up to 40% of households could be drawn into fuel poverty by soaring energy prices this winter, the boss of one of the UK’s largest energy providers has told Sky News.
Rising wholesale gas prices, fuelled by the war in Ukraine, mean the domestic energy price cap is forecast to increase from the current £1,971 for typical usage, to up to £3,420 in October, and as high as £3,850 in January.
Michael Lewis, the chief executive of E.ON, which supplies gas and electricity to almost four million households, said that without more direct government help millions of households will be spending more than 10% of their income on energy, the definition of fuel poverty.
“We called for more intervention earlier in the year as we could see up to 40% of our customer base going into fuel poverty,” he said.
“We would expect prices to be above £3,000, possibly up to £3,500, depending on how wholesale prices develop.
“Beyond that into January, we would certainly expect the high wholesale prices to feed into the price cap after Christmas and probably a further increase.
“So there’s no doubt about it, these prices are unprecedented.
“I’ve never seen anything this high in my 30 years in the industry, and certainly nothing that has increased so quickly. So there is a big challenge.”
Tips to save energy from the Energy Saving Trust
- Avoid overfilling the kettle
- Insulate your water tank, pipes and radiators
- Only run your dishwasher when it is full
- Swap your bath for a shower
- Spend less time in the shower
- Avoid the tumble dryer
- Use your washing machine on a 30-degree cycle instead of higher temperatures and reduce usage
- Turn lights off
- Draught-proof windows and doors
- Turn your appliances off standby mode.
Mr Lewis warned that existing government support for the most vulnerable, worth up to £1,200 a year, will be swallowed by the looming increases.
He called for an urgent commitment to household insulation and other energy-reduction measures.
“The previous intervention the government announced, which was £400 to £1,200 per customer, depending on their personal circumstances, was a huge relief to us because it meant that we were getting targeted support,” he said.
“Unfortunately, since that announcement was made wholesale prices have increased again and wiped out a large proportion of that.
“So absolutely, we will start to see more people going into fuel poverty in spite of that government intervention, which is why we need more short-term help.”
“And that’s why we’ve called for more government intervention.
“People do need help with these bills, things like removal of environmental levies and VAT from bills, more targeted aid, and we can do more with things like smart thermostats, cavity wall insulation to help customers in the short term to reduce their bills.
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“And indeed why we need to look at the long term doubling down on net zero energy efficiency which I repeat is the closest thing we get to a silver bullet which deals with both the short term and the long term necessity to get off gas and get to net zero.”
The government says its existing support to customers is worth £38bn and both the candidates to succeed Boris Johnson have promised to cut taxes on energy bills, with Liz Truss focused on suspending green levies and Rishi Sunak pledging to halt VAT on bills, measures worth less than £200 per household.
Chancellor Nadeem Zahawi said he began considering additional support for consumers beyond October this week, promising to do “everything in our power” to help people.