Energy UK Warns of £1,999 Bills as Suppliers Demand Action

Energy UK, the trade body representing UK energy suppliers, is pressing the government for immediate intervention, warning that inaction on winter bills would trigger "a longer-term, more costly and deeper crisis."

The warning comes as forecasters predict a 16% rise in domestic energy prices in the new year for the 20 million households on variable tariffs covered by regulator Ofgem's price cap, according to figures revealed by the BBC earlier this week.

Consultancy Cornwall Insight said its latest forecast points to the typical annual bill climbing to £1,999 in January. That follows a 4% increase at the start of October — roughly £60 per year, or £5 per month — which took the typical annual bill to £1,723 for a household using both electricity and gas and paying by direct debit, if that level were sustained for a year.

Prime Minister Andy Burnham said the government was weighing its options. "We're looking at any measure that can give people breathing space, that can take the pressure off," he told the BBC at the Labour Party conference last week, adding that the cost of home energy, as well as petrol and diesel, was "very difficult indeed."

Energy UK acknowledged that the government had already delivered some relief. VAT on electricity bills was cut on Thursday, and some levies were cancelled or shifted into taxation earlier this year. But the trade body said those savings had been wiped out by high wholesale prices paid by suppliers — driven in part by conflict in the Middle East and disruption to shipping through the Strait of Hormuz.

It likened the current trajectory to 2022, when Russia's invasion of Ukraine sent bills soaring. "We cannot afford to wait for the same scale of crisis before acting again. We must heed the lessons from that time," said Dhara Vyas, chief executive of Energy UK.

Vyas pointed to growing levels of customer debt as evidence that intervention cannot wait. The cost of that debt now adds an average of £67 a year to every household's bills.

Her comments followed a blunt warning from Simone Rossi, the boss of supplier EDF Energy, who said on Thursday that the UK was "walking into a second energy crisis." Burnham told the BBC he would not call Rossi's warning an overstatement. Vyas said action was needed before bills jumped again.

"Last-minute emergency interventions run the risk of being badly targeted and costing us all more," she said.

Energy UK is calling for three specific government measures. First, targeted support over and above the £150 Warm Home Discount given to people on benefits, which would eventually lead to the introduction of a discounted social tariff. Second, a debt relief scheme for the most severely affected households, forming part of a broader strategy to prevent debt build-up among new tenants and homeowners. Third, removing more levies from electricity bills and shifting them into taxation, as part of a wider move toward electrification.

The immediate trigger for the industry's alarm is timing. Domestic gas prices rose on Thursday, and forecasts point to a steep increase in January — meaning the government faces a narrow window to act before the next price cap adjustment lands on household budgets.