Energy prices: Government must show more urgency, says Ovo boss
Business / Mon 27th Dec 2021 at 09:08am
THE government is showing “nowhere near enough urgency” in finding a solution to steep increases in gas and electricity prices, one energy boss has told the BBC.
Ovo’s boss Stephen Fitzpatrick predicts the rise in wholesale gas prices and its impact on people will be “an enormous crisis for 2022”.
The business secretary will meet regulator Ofgem and energy firms later.
The government says it wants to make sure consumers are protected.
Mr Fitzpatrick said the main worry was how consumers would be supported through price increases.
“We’ve seen this energy crisis unfold now for the last three months and we’ve watched as energy prices have spiked, fallen back, and spiked again,” he said.
“We’ve had more than 30 bankruptcies in the sector, we’ve had millions of customers forced to change supplier.
“The cost to the consumer has already been more than £4bn. We haven’t seen any action from the government or from the regulator. There’s an acceptance that there’s a problem, but nowhere near enough urgency to find a solution,” he added.
He pointed to the example of some European governments that have helped consumers in their countries.
In recent months, wholesale gas prices have risen to unprecedented levels. Last week, they hit a new record of 450p per therm, which experts think could take average annual gas bills to around £2,000 next year.
On Thursday, Energy UK, the industry’s trade body, warned bills could soar by another 50% unless the government intervenes.
More than 20 energy companies have collapsed since wholesale prices started to spike, unable to pay high prices or pass the increased cost on to consumers. Nearly four million customers have been affected.
Mr Fitzpatrick’s comments come ahead of Monday’s meeting between Business Secretary Kwasi Kwarteng and the bosses of leading energy companies and the regulator Ofgem.
Consumers are protected from big rises in wholesale costs by a price cap set by the regulator Ofgem. However, the cap is due to change in April.
Labour is urging the government to use the money raised through higher than expected VAT receipts, driven by the higher cost of food and energy prices, to cut household energy bills.
Shadow chancellor Rachel Reeves said Labour wants the government to immediately announce the removal of VAT from household heating bills over winter.
“We need a sustainable and ambitious approach to energy,” she said.
A government statement said: “We regularly engage with the energy industry and will continue to ensure that consumers are protected through the Energy Price Cap, which is insulating millions from record global gas prices.”