Energy bosses say support offered to bill payers is 'not going to be anywhere near enough'

Chief executives from four of the ‘big six’ energy firms told the Business, Energy and Industrial Strategy (BEIS) Committee that thousands of customers have expressed concerns about paying their bills in recent weeks and they will feel the full force of the price rise this winter when their energy consumption increases.

Around 22m households saw bills for gas and electricity rise on April 1, as the Government increased the energy price cap by 54 per cent to ease pressure on suppliers following a record surge in global gas prices. The cap could be raised again in October.

The Government said it is taking a number of steps to support households, such as providing a repayable £200 rebate in October, but Keith Anderson, chief executive at ScottishPower, said it is “not going to be anywhere near enough”.

Mr Anderson said his company set up a helpline to support people struggling with their bills and it received more than 8,000 calls in the first week from customers who have “real concerns about their ability to cope”.

He said the Government should replace the price cap with a social tariff, to ensure discounts are offered to customers who need it most, and introduce a deficit fund, which would see £1,000 taken off vulnerable customers’ bills and placed into a central fund which is paid off over 10 years.

Michael Lewis, chief executive of E.ON, said he supported calls for a social tariff, but the Government should also extend the Warm Home Discount Scheme, stop charging VAT on home energy bills and invest heavily in improving the energy efficiency of homes.

He said: “We are expecting a severe impact on customers' ability to pay. There is no doubt that the Government's intervention – the £200 that will be paid in October and the rebate on council tax will help - but it isn't nearly enough to mitigate the full impact of this price increase.

“What we expect to see is, firstly, a significantly larger number of people moving into poverty as a consequence.”

Chris O’Shea, chief executive of Centrica, said around 716,000 customers - around 10 per cent - are currently behind on their payments. That is up from 125,000 in April last year and it means the company has taken on around £50m of extra debt.

He said it “will get worse” for customers on prepayment metres from October, unless the Government intervenes, while direct debit customers will feel “the real effect” of the price rise from December.

Mr O’Shea also told the committee a windfall tax on oil and gas production in the UK, which has been proposed by Labour, would not relieve the pressure on bill payers.

“The impact of about 10 per cent windfall tax on Centrica last year would have been £5m, so it’s not a material return for the UK, because the majority of profits are in Norway and taxed at 78 per cent by the Norwegian government,” he said.

He also said that taxpayers are footing the bill after people set up energy companies, without enough experience or resources, and took unacceptable risks.

“51 suppliers in the last four years have gone bust. They've taken £500m of customers' money with them. I think that's scandalous,” he said. “One third of the increase of the electricity standing charge is to repay customer credit balances.”

Simone Rossi, chief executive of EDF Energy, said his company has seen a 40 per cent increase in calls about payment concerns.

“When the Government intervened at the beginning of February, it was maybe proportionate at that point in time," he said.

“But ever since then the situation has worsened considerably, with the war in Ukraine and further turmoil in the markets. Bills will be higher for longer, so I would expect the Government to reassess the situation.”