Suppliers pile pressure on government over energy bills

Suppliers are warning that the UK is facing a second energy crisis due to rising wholesale prices and growing customer debt.

The government has been urged to take immediate action to help households struggling with bills this winter.

Energy UK said domestic gas prices, which rose on Thursday, forecasters predicted a 16% rise in January for 20 million households on variable tariffs affected by regulator Ofgem's price cap.

Immediate action is needed to help households struggling with bills this winter, says trade body Energy UK.

The government should take immediate action to help those struggling with energy bills this winter, the suppliers' trade body has said.

Energy UK said domestic gas prices, which rose on Thursday, and forecasts of steep rises in January meant inaction would lead to a longer-term, more costly and deeper crisis.

Figures revealed by the BBC earlier this week showed forecasters predicting a 16% rise in domestic energy prices in the new year for 20 million households on variable tariffs affected by regulator Ofgem's price cap.

Prime Minister Andy Burnham said the government was considering any measure that took the pressure off.

Households in England, Scotland and Wales on variable energy tariffs set by Ofgem's price cap, which puts a maximum price on each unit of gas and electricity, were hit with a 4% price increase at the start of October.

This is the equivalent of about £60 per year - or £5 per month - taking an annual bill to £1,723 for the typical household using both electricity and gas and paying by direct debit if this level was sustained for a year.

But forecasts show a far greater increase is possible for bills in January. Consultancy Cornwall Insight said its latest forecast suggested the same typical annual bill would rise to £1,999.

Energy UK said it accepted the government had already provided some support. 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 these savings had been wiped out by high wholesale prices, paid by suppliers, that were the result in part of international events - namely conflict in the Middle East and the disruption to shipping through the Strait of Hormuz.