Clarity on the Energy Price Guarantee (EPG) cannot wait any longer, energy firms have warned government.
The EPG level is due to rise by £500 from £2,500 to £3,000 on 1 April. However, pressure has been mounting on the government to keep the EPG at its current level and reports in national newspapers this weekend suggest that chancellor Jeremy Hunt will do just that.
A source close to the government told Utility Week that “it’s pretty clear it’s going to happen” when asked if the lower limit would stay in place. The source added that while suppliers have not been given a final decision, “they have been told to prepare for the eventuality” that the current £2,500 EPG level will be extended.
However, it has also widely been reported that Hunt will not confirm the £2,500 EPG extension until his Budget announcement on 15 March.
This would give suppliers just two weeks to prepare for any changes coming in on 1 April. Most firms will be telling customers of changes to their bills in the coming weeks and as such they are calling for clarity on the EPG.
Eon UK chief executive Michael Lewis – who last week announced he would be exiting the UK retailer – said that a definite decision from government was needed now to avoid unnecessary stress.
“£500 is a significant increase at a time when customers are already under a lot of pressure financially,” he said. “On behalf of all customers I’d strongly urge the government to continue supporting lower bills and to announce that decision as soon as possible in order to avoid further confusion and distress for customers around whether bills will go up drastically again from April.”
Likewise a spokesperson for EDF said that the firm has written to Hunt urging him to postpone the EPG changes.
“We hope that a decision is reached sooner rather than later to avoid confusion. Any further delays will only add to the concerns and worries in an already difficult time for customers,” the spokesperson added. “We stand ready to respond should government decide to keep the discount at the current rate.”
Meanwhile, a spokesperson for Octopus said that while “it is not ideal” to wait until the Budget for clarity “it only takes a couple of days to respond to price changes”. The spokesperson added: “While its not really a problem for us operationally, thinking of our customers we would ideally know as soon as possible so that they can plan for any changes to their bills.”
Reports that the current EPG level would be extended began circulating late last week after many firms indicated to prepayment meter providers that they would be keeping their rates at the current level. While this is not a definitive indication that the current EPG will be extended it does suggest there is a strong assumption that it could be.
Matthew Cole, chair of Fuel Bank Foundation, said that a decision is needed to provide urgent clarity to both consumers and suppliers.
“The music does suggest that a change is a-coming,” Cole said. “Households across the country want surety about what they will need to pay for energy this spring and so it’s critical that the details of any reduction from the planned £3,000 EPG – or indeed confirmation that it’s not changing – are shared as soon as possible.”
He added: “Suppliers are also making the final preparations for the planned increase to £3,000, and so urgent clarification is needed to avoid the risk of unnecessary rework – that ultimately we all pay for – and the customer confusion caused by communicating one thing, and then having to contact them again to undo what’s been done.”
A spokesperson for Energy UK said that “ will do their best if it’s not confirmed until 15th but it’s not ideal”.
Energy UK chief executive Emma Pinchbeck added: “Falling wholesale costs means the EPG has cost the Government a lot less than had been anticipated so we, alongside many charities and consumer groups, are urging them to use this surplus to hold the EPG at £2,500 – and to announce that quickly so it can be incorporated in customer bills in time for April.”
Last Week, So Energy forecasted a 76% cost increase for customers who pay their energy bills via direct debit if the EPG is increased to £3,000.