Energy industry urges Government to help with bills amid Iran war volatility
Energy UK said latest projections from suppliers suggested customers could face an increase of as much as £250 on their annual bill.
The Government should “immediately” step up efforts to ensure the most vulnerable households receive help with energy bills amid predictions of a £250 hike as a result of the conflict in the Middle East, the industry has said.
Energy UK said latest projections from suppliers suggested customers could face an increase of as much as £250 on their annual bill as the United States and Israel continue to bomb Iran, although it added it was too early to be sure of the impact.
Analysts at Cornwall Insight have forecast that household energy bills could rise by more than 10% from July, following sharp increases in wholesale gas prices.
Its latest forecast predicts that Ofgem’s price cap for July to September will surge to £1,827 a year from the current £1,641 for a typical dual fuel household.
However, it said the final price cap figure would be based on average wholesale prices over a three-month period, meaning that it would depend on how long gas prices stayed elevated and how long the period of volatility continued.
Energy UK warned that the longer the conflict continued, the greater the risk that bills reached the levels at which the Government was compelled to subsidise domestic and business customers back in 2022 as a result of volatility following Russia’s invasion of Ukraine.
At that time, the Government provided universal support to every bill payer regardless of their circumstances, costing more than £35 billion.
Energy UK said this could have cost £12.5 billion if it had been directed only at low and lower middle-income customers.
The industry body said there was still time to “rapidly improve” targeting if a significant intervention was required later this year – especially over the winter months.
It is calling on the Government to immediately bring together a “vaccine-style taskforce”, involving ministers and senior officials from relevant departments and energy industry data experts as part of a “sprint to urgently assess options”.
It suggested this could include accelerating existing data-sharing programmes to identify customers already in receipt of welfare or disability payments and those with serious medical conditions, and creating an application process for those who do not receive benefits but might still need support.
It is also proposing lowering all electric bills by further reducing policy costs, which it said would be of particular benefit to those using electric storage heaters, who are twice as likely to be in fuel poverty.
Energy UK chief executive Dhara Vyas said: “It is still too early to tell how significant an impact the conflict in the Middle East will have on British energy bills – but it is clearly sensible to prepare and ensure any intervention that might be necessary is both cost effective and directed to help those who most need it.
“Successive governments have recognised the need to target support better but progress on the data-sharing that could enable this has been slow.
“As we saw during the pandemic and previous energy crisis, the state can move quickly and inject a sense of urgency into work when it is really required.
“It would help the country just as much outside a crisis as within one. Energy bills remain higher than they were before the invasion of Ukraine, and there is growing concern about record amounts of customer debt.
“Prioritising efforts to identify these customers is crucial for any potential emergency response and will also mean that we can ensure they are supported in the long term.”
