The chief executive of Big Six energy supplier Scottish Power has issued a stark warning to UK households that the current energy crisis and rising energy bills could last until 2023.
Keith Anderson recently voiced his concerns on this while also calling on the government and the industry regulator Ofgem to review the current energy price cap. In addition, Mr Anderson also claimed that he expects that only five or six energy providers will survive this turbulent time.
Should this be the case, not only will we see further strain on homes across the nation who are already struggling with higher energy bills, but fewer suppliers will make the markets far less competitive, severely limiting the choice of deals and tariffs.
Calls for a “reflective and flexible” energy price cap
At the start of the month, the latest energy price cap was rolled out and it saw the cost of standard variable tariffs rise by £139 a year, going from £1,138 to £1,277. However, with the record wholesale gas prices we’re currently seeing, this is the cheapest deal consumers can get at the moment.
While this is posing significant financial challenges for many of us as bill payers, energy suppliers are also being hit hard by this – as at the moment it costs them an extra £1,000 per customer who uses this tariff, due to how much it currently costs them to purchase gas at wholesale prices. This has been a key factor in why so many suppliers have gone bust.
To make matters worse, it’s believed that as many as two million UK households will move onto the standard tariff in the coming weeks, with an estimated cost of an extra £4bn for suppliers to cover over the next 12 months.
Speaking on the matter, Keith Anderson cited this as the main reason why he believes there will be such drastic effects on the industry: “All of that financial stress will hit the companies left in the market. That’s why we think there’s a significant risk that the market returns to five or six companies. It will only be the biggest and the strongest which can survive this pressure.”
He went on to suggest that Ofgem’s price cap should be “changing more frequently” and that a more “reflective and flexible” approach would both make it easier for suppliers to manage rising and falling prices by being able to pass them on to customers much quicker.
A spokesperson for Ofgem responded to Mr Anderson’s comments, stating “the price cap will remain in place this winter to protect millions of people from the sudden increases in global gas prices” and that they “are also working with government to ensure that we have a sustainable energy market that works for all customers”.
What can consumers do about all of this?
Unfortunately, at the moment there's very little we can do to change the situation with our energy bills until wholesale prices start to return to normal levels.
The current advice is to avoid running an energy comparison and/or looking to switch provider, because as mentioned above, the best energy deals on the market right now is the price cap – all the best energy suppliers can do for you right now is offer better quality customer services and tech.
If you are struggling with your current energy bills as we head towards winter, you could look to schemes like the Warm Home Discount and the Winter Fuel Payment that can see you get money off your bills, subject to eligibility. You may also want to try and reduce your consumption and be more energy efficient, by using energy saving tips like these.
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