The industry body warned that more electricity and gas suppliers may go bankrupt because of the rising number of households who are unable to pay their bills.
Energy UK’s chief executive Emma Pinchbeck urged the government not to increase energy bills by 20 per cent in April. She stated that if this happens, “millions more households” will be in debt, with “disastrous consequences” for both consumers and businesses.
She said that if suppliers are unable to install prepayment meters to collect unpaid bills, it could lead to “catastrophic debt levels”, triggering the failure of even more companies and higher bills for those who do pay. She said, “The money must come from somewhere.”
Energy UK, which represents over 100 companies, including all major household suppliers, wrote to Grant Shapps repeatedly to demand that government action be taken.
Pinchbeck’s latest intervention is taking place amid tensions between Shapps and the industry. He has previously criticised the industry for its response to The Times’s investigation into British Gas installing prepayment meters at vulnerable customers’ homes.
Pinchbeck wrote last week to Shapps: “The industry should take responsibility for its failures, but there is a larger economic crisis that needs to be addressed and only [the] government can do this.”
Energy UK calls on ministers not to allow prices to go up to £3,000 per year in April, but to keep the bills below £2,500 annually. It wants them to provide targeted assistance for vulnerable households through a “social tariff” at a lower price.
“More customers are unable to pay their bills, and that is a problem that should be addressed,” Pinchbeck said. However, retailers will be able to impose more debt on them which could lead to supplier failure,” Pinchbeck stated.
Although the industry raised concerns about the sustainability of the retail sector’s affordability and debt with the government, they received little response. She said that it felt like “screaming into the void”.
Since late 2021, more than two dozen suppliers have been forced to close their doors. This was due to rising energy prices. All consumers are responsible for paying multibillion-pound expenses. Millions of people are now in fuel poverty because of rising bills.
Ofgem was the regulator. It reported last month that the largest increase in energy debt in a decade had seen households owe £2.5 billion to their suppliers. Prepayment meters, which prevent households from using energy and allow suppliers to recover the debt, have been installed in large numbers.
However, such meters should not be installed in vulnerable homes. Ofgem is looking into British Gas’s scandal. Under warrant, big suppliers have stopped installations.
Pinchbeck stated that the industry was “appalled” at the revelations. You wouldn’t be human to be shocked at that stuff. If there is rule-breaking, it should be addressed.”
She defended prepayment meters in a broader sense. Shapps was informed that prepayment meters played an important role in avoiding bad debt accumulation across the industry. This would have resulted in more supplier failures, increasing taxpayer costs.
Shell said it was considering quitting British household supply markets. Pinchbeck stated that other companies may follow Shell’s lead as the sector is still losing money.
Although bills are expected to fall in the second half, she stated that the crisis was not over. “The government is naive about the idea of ending the affordability crisis.”
A spokeswoman for Ofgem stated that high energy prices and the cost-of-living crisis made it difficult for millions of households to pay their bills right now. We also recognize this could present challenges for energy companies.
A spokesperson for the government said that it was working with industry and consumer groups to determine the best long-term strategy to help vulnerable households starting in April.
