Energy chiefs expect “severe impact on customers’ ability to pay”

Energy bosses have predicted that a “significantly larger” number of people will move into fuel poverty

Millions of customers are struggling to pay their energy bills following a major increase in the price cap with average household gas and electricity bills rising to £1,971 a year.

Speaking during a session of the Business, Energy and Industrial Strategy Committee, Michael Lewis, Chief Executive Officer of E.ON, said: “The price increase we have seen on 1st of April was unprecedented, never seen anything like it in my 30 years in the industry.

“We are expecting a severe impact on the customers‘ ability to pay. There is no doubt that the government’s intervention will help but it is not nearly enough to mitigate the full impact of this price increase.

“So what we expect to see is first, a significantly larger number of people moving into fuel poverty as a consequence of the price increase and a significant increase in bad debt.

“If nothing is done further by the government to mitigate this impact, we expect to see the outstanding debt increase by around 50% on our books, that’s what our modeling shows us by the end of this year.”

Commenting on the current financial situation in the UK’s energy market, Simone Rossi, Chief Executive Officer of EDF, said: “Over the last few months, we have recorded a 40% increase in the calls from customers concerned about the debt.

“We have seen data showing that some customers go from spending one pound in 12 on energy bills to one pound in six. We are concerned about what is in front of us.”

Keith Anderson, Chief Executive Officer of ScottishPower said: “I am hugely concerned about people, massively concerned and for anyone out there.

“So many people are going to struggle with this issue. We are seeing the start of that with our customers – last week we set up a new line for people to contact us, we had 8,000 calls last week alone from people coming through on the number with concerns about the ability to pay.

“A massive concern from people, a huge amount of anxiety from people on the phone about what they are going to do.”

The current situation will get worse if there is no further government intervention, Chris O’Shea, Chief Executive Officer of Centrica, has said.

Mr O’Shea added: “We have just about 10% of our customers who are currently late in payments, around 716,000 customers on average of about £440 in debt.

“That’s an increase of 125,000 versus this time last year and it’s about £50 million of extra debt. When we get into the winter we will see the real effect on prepayment customers in October.

“So, there’s still some time to do something with this but it will get worse without any further intervention.”

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