Expect another 18 months of rising energy bills, UK households warned

Expect another 18 months of rising energy bills, UK households warned

The Scottish Power chief said Britain’s gas crisis would continue to push up energy bills until 2023 and would only leave five or six of the most powerful suppliers in place.

Keith Anderson, Managing Director of Scottish Power, said record UK energy prices could mean households face an additional 18 months of rising bills and even well-managed energy providers could go bankrupt .

The only energy companies capable of surviving another £ 4bn hard blow to the energy supply market would include a small number of players backed by large multinational companies, he said, reversing years increasing competition in the market.

The UK energy market has grown from the six major suppliers that have dominated it since privatization, including Scottish Power, to around 70 companies in early 2021. But in the past six weeks, soaring energy prices have sparked the bankruptcy of 13 suppliers, leaving more than 2m of housing without a supplier.

“And during that time, nothing has changed,” Anderson said. “I haven’t seen anything on what the new regulations might look like. I haven’t seen anything about protecting vulnerable customers and the fuel poor.

Scottish Power has called on the government and regulator to prevent a downturn in the energy market by adjusting price caps to make it easier for suppliers to pass on rapidly rising energy costs. At the same time, Anderson said the government should put in place a social energy tariff to protect households that couldn’t afford the constantly rising bills.

Consumers face one of the biggest bill increases on record this winter after the regulator raised the maximum level of its energy price cap from October 1 to reflect soaring market prices wholesale.

But energy bosses fear that the cap, which changes every six months, will not keep pace with the rapidly growing market and may cause more suppliers to bow unless they have the financial strength to shoulder. costs before the next price hike.

“Customers are going to see their bills increase dramatically in April and October, and I suspect they will see another increase in their bills six months later,” Anderson said. “Moving the energy price cap every six months is simply hopeless. We need it to start changing more frequently.

Energy providers can expect a double whammy as millions more people move to a standard capped tariff at the end of their fixed rate deal, rather than choosing one of the new fixed tariffs that prices have increase. Up to 2 million households are expected to move to a ceiling tariff in the coming months, each at an additional cost of £ 1,000 to their supplier, which could lead to unforeseen costs of up to £ 4 billion over the course of the next year.

“All of this financial stress will hit companies left in the market. That’s why we think there is a significant risk that the market will fall back to five or six companies. It will only be the biggest and the strongest who can survive this pressure, ”he said.

Anderson said a “reflective and flexible” price cap should change “at least quarterly” to stem the number of energy providers leaving. This would help pass on lower energy prices to customers earlier, he said.

For consumers who cannot afford regular price hikes, the government should come up with a social energy tariff to protect growing numbers of people from fuel poverty.

Ofgem said it was working closely with government and the energy industry to “ensure customers stay protected.”

“We have put in place robust systems to guarantee this,” the regulator said. “The price cap will remain in place this winter to protect millions of people from sudden increases in global gas prices. We are also working with the government to make sure we have a sustainable energy market that works for all customers. “

In addition to providing domestic energy, Scottish Power manages energy networks and invests in renewable energies. Its owner, Iberdrola, said this week that Scottish Power’s renewable energy division would invest £ 6 billion in a North Sea wind complex off Britain’s east coast, its biggest investment in a project to the world.


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