Energy firms will begin writing to customers within days to warn them of bill increases from the start of April. Firms have to give customers reasonable notice of price increases or changes that will leave them worse off, according to Citizens Advice. Typical household energy bills are set to rise to £3,000 per year from April. The BBC understands the government is reviewing the level of energy support amid calls by campaigners for help to be maintained to prevent bills from rising. It comes after Energy Secretary Grant Shapps said he was sympathetic to the idea that the government should stop the rise in annual energy bills. From the beginning of April, government support under the energy price guarantee is due to get less generous. At the moment, typical bills are limited to £2,500, plus a £400 winter discount, which will also end from April. Nearly two million more households could struggle to pay the higher bills, fuel poverty campaigners have said.
Industry group Energy UK said firms would be writing to customers to let them know how much their bills were going up within the next few days. Energy companies are waiting for the government to confirm the level of support households will get before sending the letters, and that is due to happen within days. Customers who are having difficulty paying their bills should contact their supplier. Firms have a range of financial and other support available, an Energy UK spokesman said. People who are under pressure can talk about changing their repayment plans, he said. However, “more customers need more support than ever before, and at a time when people are struggling to afford all their bills, there is a limit to what the energy industry can do”, he added.
Jeremy Hunt told me a fortnight ago that all the help was “under review”. The Treasury is privately pointing to that interview now. It is looking a lot like some extra support, but as the Chancellor also pointed out to me, he doubts he has the room for a major new initiative. However, postponing that reduction in energy support by a few months to a point when it is no longer relevant, would not be a new initiative. Some energy suppliers have already begun a wave of emails warning of the rise, and, crucially, pinning the rise on decisions of the government. For example British Gas wrote to customers saying “because of the changes the government is making to the energy price guarantee, the amount you pay for your energy is due to change this April”.
Campaigners are also calling it the “government’s energy price rise”, and asking for postponement of the increase to the energy price guarantee from April to the summer. Because of falls in the wholesale energy price this will wipe out the rise, result in inflation falling more rapidly, and help limit the UK’s economic downturn. But it will definitely cost a few billion and could leave the Treasury exposed to tens of billions more if there is any unexpected renewed hike in global gas prices. Fuel poverty campaigners said the number of households that would have difficulty paying for energy from the beginning of April, would rise from 6.7 million to 8.4 million.
The number of people who can’t keep their home adequately heated – which stands at 3.2 million – would also go up, National Energy Action said. The charity is calling for more targeted support so that those who are struggling the most get the most help. Without more government support, the number of people having to make a choice between heating and eating will continue to rise, a spokeswoman said. Vulnerable people, such as those with health issues who need to use more energy, are already self-disconnecting, she added.
Bill relief?
Energy Secretary Mr Shapps has said he is “very sympathetic” to extending government support, and is in talks with Chancellor Jeremy Hunt on the issue. The Institute for Fiscal Studies (IFS) said a better economic outlook and falling wholesale energy prices meant the UK was set to borrow tens of billions of pounds less than expected this year.
This means the government has room to extend the energy price guarantee for another three months to cushion the transition to higher bills, its director Paul Johnson told the BBC’s Today programme. Other organisations, including the Resolution Foundation, have said the government is very likely to extend energy bill support. Energy UK urged the government to hold the level of support at £2,500 for an average household, “and to announce that quickly so it can be incorporated in customer bills in time for April”.
The Treasury declined to comment, including on whether there would be an announcement on further energy bill support in the upcoming Budget. The BBC understands that its current position is that falling wholesale energy prices will eventually feed through to bills, and that as prices fall, the government will get less in tax receipts. However, the level of energy support is under review, the BBC understands. In a speech on Wednesday, Mr Shapps said firms should pass on falling wholesale costs to consumers as soon as possible, and the UK should focus on “ever-greater” independent and cheaper energy.
