Energy bills could reach ‘much higher’ than £3,000

Annual household energy bills could rise to “much higher” than £3,000 in October, Energy UK’s chief executive has warned.

Emma Pinchbeck told a House of Commons reception on Tuesday (15 March), organised by the industry body and the all-party Parliamentary Renewable and Sustainable Energy Group (PRASEG) , that predictions the energy price cap could increase to £3,000 seem “plausible in a way it would not have done a few weeks ago.”

She added that “much higher” rises also seem “plausible.”

Such large increases would push “around a third” of households into fuel poverty, defined as when they are spending a tenth of their income on energy bills, Pinchbeck said.

The government “may need to do more” than it had done in February when chancellor of the exchequer Rishi Sunak announced his £9.1 billion package of measures to support energy customers, she said.

In terms of the industry’s response, the Energy UK head urged it to get onto a “war footing” to “see how fast we can go”.

Her call for  was backed up by PRASEG chair Bim Afolam, who said: “The government needs to recognise that unless it can put on almost a war footing the deployment of much more of this British renewable energy, we are going to have a whole world of problems.” He said the roll-out of low-carbon power must “absolutely accelerate” by as much as six-fold.

The Conservative MP also dismissed the suggestion that Nigel Farage will repeat his success on the 2016 Brexit vote with his new campaign to reverse the government’s net zero policy.

He said that while the former UKIP leader’s Brexit campaign had been based on years of experience as a Euro MP and an understanding of how to exploit splits in the Conservative party over EU membership, net zero is a “completely different world” with only a few sceptics questioning the underlying science of global warming.

Energy minister Greg Hands told the reception that the current crisis “underscores” the importance of building a “strong, home-grown renewable energy sector”.

Gillian Cooper, head of energy policy at Citizens Advice, warned that the chancellor’s package of support “doesn’t look like it is going to be enough”.

With bills unlikely to return to “normal levels” soon, a “more strategic” approach to helping people cope with increased energy bills may be required, she added, noting the importance  of improvements to poor quality housing.

Darren Jones MP, chair of the Business, Energy and Industrial Strategy Committee, said the £350 many customers will receive under the chancellor’s package is “not good enough” and that Sunak would have “no choice” about extending support unless he is prepared to allow many families to plunge into “destitution”.

Investec analyst Martin Young warned shortly after Russia’s invasion of Ukraine that the price cap on default tariffs was on track to hit £3,238 in October based on forward wholesale energy prices at the time. The Fuel Bank Foundation said recently that a £3,000 annual bill – its central forecast for the 12 months from the beginning of October – would see monthly bills for prepayment customers peak at £428 in January 2023.