Energy UK has called on Chancellor Rishi Sunak to provide additional support measures for consumers and the economy amid volatile energy prices.
In an open letter sent last week, the trade association’s chief executive Emma Pinchbeck reaffirmed that there wasn’t a concern about security of supply, but instead exposure to high prices.
She pointed to how wholesale gas prices spiked by 500% in 2021, leading to 29 UK retail energy suppliers exiting the market and a 54% rise in energy bills from April that is expected to put an additional one million UK households into fuel poverty.
“Following the invasion of the Ukraine, we have seen further spikes in prices, as the markets respond to uncertainties, and industry and Governments around Europe seek to move away from gas dependency at speed. The energy sector stands fully with the Government in terms of taking any action you feel necessary to support the people of Ukraine and our neighbours in Europe, but there are real consequences for industry and our customers that need to be managed,” she wrote.
With Sunak set to announce the Spring Statement on 23 March, the letter calls on the Chancellor to re-evaluate the risk of high energy prices on the UK economy. It says the energy industry will do everything it can – and is already working with consumer campaigns and charities, as well as the government and Ofgem – to support consumers, but it cannot absorb the cost of the crisis alone.
As prices go up, leading to increased amounts of consumer debt, more suppliers are likely to exit the market. Already, supplier collapses have collectively led to an increase in energy bills of £68 a year, or £2.6 billion in total.
“We welcome the Government’s clear commitment to the energy transition, and remain clear that delivering a net-zero power system in the 2030s is the right long-term response to the crisis in Ukraine and our exposure to global gas prices. However, the question is what we can do in the short term to manage the impacts of this crisis?” continues Pinchbeck.
In January, Sunak unveiled three key measures to help manage the energy crisis, including a one-off repayable £200 loan, a £150 council tax rebate and a discretionary fund to help households manage the increase over the summer.
While these were welcomed by Energy UK, it has warned that further measures are needed as high power prices endure and market conditions outpace the support.
Given the volatility in the energy market following the Russian invasion of Ukraine, some analysts are predicting that energy bills could grow to over £3,000.
Prime Minister Boris Johnson is expected to release a new energy strategy in the coming days in response to the volatility and high power prices. Whilst the Labour party has set out a five point plan to increase energy security.