Suppliers Warn of “Second Energy Crisis” as Government Faces Pressure Over Energy Bills

Energy bills are once again at the centre of a political storm, with the industry’s own trade body warning the government that delaying support for struggling households could trigger a deeper and more expensive crisis than the one Britain endured just a few years ago.

Energy UK, which represents suppliers, says ministers need to act immediately rather than wait for conditions to worsen further. The warning comes after domestic gas prices rose on Thursday and new forecasts pointed to a steep increase in energy bills from January, just as colder weather pushes up demand.

Figures reported by the BBC this week suggest a 16% rise in domestic energy prices is likely in the new year for roughly 20 million households on variable tariffs governed by regulator Ofgem’s price cap. That cap, which limits the maximum price suppliers can charge per unit of gas and electricity, already rose by 4% at the start of October — adding about £60 a year, or £5 a month, to a typical household’s costs and pushing the average annual bill for dual-fuel customers paying by direct debit to £1,723.

Energy bills could near £2,000 by January

The outlook for the new year is considerably bleaker. Consultancy Cornwall Insight forecasts that the same typical annual bill could rise to £1,999 in January, a jump that would mark the sharpest seasonal increase in four years and pile further strain on household budgets already stretched by the broader cost of living.

Energy UK acknowledges the government has taken some steps to ease the burden, including a cut to VAT on electricity bills that took effect on Thursday and the earlier removal or shifting of certain levies into general taxation. But the trade body argues those gains have already been swallowed up by soaring wholesale costs, which suppliers must pay before passing charges on to customers.

Much of that wholesale pressure, the organisation says, stems from international instability — particularly conflict in the Middle East and disruption to shipping routes through the Strait of Hormuz — echoing the dynamics that sent bills spiralling after Russia’s invasion of Ukraine in 2022.

“We cannot afford to wait,” says industry chief

Dhara Vyas, chief executive of Energy UK, said the lessons of the last crisis must not be ignored. “We cannot afford to wait for the same scale of crisis before acting again,” she said, pointing to mounting customer debt as evidence that households are already struggling before the worst of the winter price rises take hold.

Vyas said the growing debt burden now adds an average of £67 a year to every household’s bill, regardless of whether they are behind on payments themselves. “Last-minute emergency interventions run the risk of being badly targeted and costing us all more,” she warned, urging the government to move before prices jump again in January rather than scrambling to respond afterwards.

Her comments followed a stark warning from Simone Rossi, chief executive of EDF Energy, who said on Thursday that the UK was “walking into a second energy crisis.” Adam Scorer, head of the fuel poverty charity National Energy, echoed the concern, telling BBC Breakfast that rising debt levels reflect not simply more people falling behind on payments, but poorer households sinking deeper into financial difficulty with no clear way out.

“Until you do something about that, there’s no way forward, there’s no breathing space, there’s no future for households who can’t see their way beyond debt,” Scorer said.

What suppliers want the government to do

Energy UK has set out a series of measures it wants ministers to consider as part of an urgent response. These include targeted financial support that goes beyond the existing £150 Warm Home Discount offered to people on benefits, eventually paving the way for a discounted social tariff for the most vulnerable customers.

The trade body is also calling for a debt relief scheme aimed at households that have fallen furthest behind, alongside a broader strategy to stop debt accumulating among new tenants and homeowners in the first place. It further wants more levies stripped from electricity bills and shifted onto general taxation, part of a long-term push toward electrification that supporters argue would make switching away from gas more financially attractive.

Prime Minister Andy Burnham, speaking after the warnings emerged, said he would not describe Rossi’s “second crisis” comments as an overstatement, acknowledging that the cost of home energy — along with petrol and diesel prices — remained “very difficult indeed” for many families. He said the government was “looking at any measure that can give people breathing space, that can take the pressure off.”

With forecasts pointing to energy bills climbing toward £2,000 a year for typical households by January, pressure is mounting on Westminster to decide quickly whether it will intervene now or risk repeating the costly, reactive scramble that characterised the last major energy crisis.