People are facing a tough winter with high energy bills and their budgets under pressure due to the ongoing cost of living crisis, the head of energy provider Centrica and owner of British Gas has warned.
“I’m worried the worst is yet to come,” said Centrica CEO Chris O’Shea. “We are seeing an end to direct debits. We see that people are having a hard time.”
With energy bills expected to rise in the new year, he fears this will add to consumer woes as people already struggle with higher rents and mortgages.
Centrica is the UK’s largest domestic energy supplier with 7.5 million customers.
Earlier this month Ofgem, the energy regulator, cut the price cap, which limited the extent of price increases for household consumers, to £1,834 a year for the average household.
However, experts expect it to rise again in January to around £2,000 in the first three months of the year, before falling to around £1,900 for the rest of 2024.
Although prices are lower than at the start of 2023, forecasts remain significantly higher than in previous years. Even with current restrictions, the average energy bill will still be more than 50 percent higher than in winter 2021/2022.
The Government’s Energy Act support scheme, which gave each household a £400 discount on their bill, ended earlier this year, but energy suppliers have called on ministers to reinstate help for those struggling.
British Gas launched its own energy support fund this month, which will provide grants of up to £1,500 to customers struggling to pay their bills. Those struggling were required to receive financial and energy counseling to qualify for the scholarship.
According to the company, more than 21,000 grants have been issued since 2021, with more than a third receiving disability benefits, about a third being single parents, and a third being children under five.
Ofgem said consumer energy debt reached £2.6 billion this month – its highest level ever – due to a combination of rising wholesale energy prices and growing pressure on the cost of living.
The regulator warned that given the expected rise in bad debts, it is considering a one-time adjustment to the price cap to reduce the risk of energy companies going bankrupt or exiting the market due to bad debts.
He believes this could lead to a temporary increase in consumer bills by an average of £17 a year.
Mr O’Shea said the regulator was in a difficult position. “The regulator has a difficult situation, but he created this market,” he said. Bloomberg News. “If everyone in the market loses money, the market will collapse.”
Source: I News
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