The UK faces a “dramatic and catastrophic winter for customers” as energy prices soar, according to a stark warning from the head of EDF Energy’s retail business.
Philippe Commaret, the energy firm’s managing director for customers, called for extra government intervention, including help for households to insulate their homes and a VAT cut for small businesses as prices jumped to record levels.
Prices for gas and electricity, which had already shot up around the world as economies recovered from coronavirus pandemic lockdowns, have been sent soaring by Russia’s invasion of Ukraine, with Russia using its control over European gas supplies to try to gain political leverage.
“We face, despite the support the government has already announced, a dramatic and catastrophic winter for customers,” Commaret told BBC Radio 4’s Today programme. “In January, half of the UK households might be in fuel poverty.”
The regulator Ofgem will publish its latest update to the energy price cap on Friday, with a uniform expectation of a steep increase in the price households pay for energy. The average annual domestic energy bill is currently capped at £1,971, but this is forecast to hit £3,582 in the autumn and as much as £4,400 in April.
EDF said it will contact 100,000 of the most vulnerable customers to inform them of ways to cut their energy bills and how to access all available support, but Commaret said more government action was needed to help customers financially.
As well as being a big retail supplier in the UK, EDF is one of the largest electricity generators. The company is majority owned by the French state, but it will be fully nationalised after France’s government forced it to sell energy it generated at below-market rates.
“We are going to incur losses this year for EDF,” Commaret said. “So for the time being we are doing everything we can do in order to help customers, but we need also the support of the government in order to step in and even to help beyond what has been already announced.”
Commaret said proposals for a “tariff deficit fund”, a scheme that would spread the cost of price increases over a decade, should be investigated, as well as a cut in VAT, given that tax receipts had increased as prices had risen. However, he said it would be crucial to “create headroom in the budget of our customers” to repay the money by helping customers use less energy in the long term.
“Basically, the solution is to insulate the UK households,” he said. The Labour party made insulating homes a key policy proposal as early as April, but the Conservative government has not yet made any big announcement on improving energy efficiency.
