Over half a million homes are expected to be pushed into fuel poverty this winter as energy prices soar.
Some of the country’s largest energy suppliers have warned the government that millions of homes will need help this winter to pay bills as Ofgem prepares to loosen its energy price cap.
The energy regulator is expected to hike prices by around £150 annually from October for around fifteen million homes who are on a default dual-fuel tariff.
The rapid increase in energy prices is a result of gas prices soaring to 16-year highs in recent weeks.
Campaigners warn that the “unprecedented” surge in global gas prices could drive over half a million more homes into fuel poverty – taking the total of homes experiencing fuel poverty to around 3.5 million.
There is a crisis on the horizon as the hike in prices is set to coincide with the wind-down of the government’s furlough scheme in September.
“This is difficult news for all households,” said the chief executive of Ofgem, Jonathan Brearley. “Therefore, my message to energy companies is clear – you need to provide all available help and support to customers who are struggling as a result of this price change.”
Some of the biggest companies in the energy sector have called on ministers to legislate a social tariff for energy that is set below the Ofgem price cap. This would prevent households from having to choose between buying food or paying their energy bills.
Chief executive of E.ON UK, Michael Lewis, said a social tariff should be “one of the top priorities” and would “signal the government’s intent to deliver a fair and just energy transition to net zero, ensuring no one is left behind”.
However, some energy suppliers with more customers in fuel poverty fear that such a scheme could add costs to their business. Octopus Energy has voiced opposition to a social tariff, and Bulb Energy says it would need to see the plan in detail before it could support it.
A spokesperson for Ofgem said: “We know that many families are suffering the economic impact of Covid-19 and that energy bills are on the rise. If anyone is struggling to pay their energy bills, we encourage them to contact their supplier who will discuss options with them.”
A government spokesperson said it was making “significant progress” in its attempt to tackle fuel poverty and will “invest £1.3bn to upgrade the energy efficiency of homes, helping low-income families significantly reduce their energy bills”.
