LONDON (Parliament Politics Magazine) – According to the leader of Britain’s largest energy supplier, consumers will have to deal with exorbitantly high fuel prices for a period of at least another 18 months.
E.ON UK’s chief executive, Michael Lewis, has urged for quite substantial intervention from the government to assist consumers cope with rising fuel prices, which is one of the major causes of the cost-of-living crisis.
When the price ceiling is lifted in October, he says, bills might reach £3,000, since individuals would require more gas and electricity to keep their houses warm.
E.ON expects nearly one in every five customers to have trouble paying their bills in the autumn, when price hikes are “baked in.” 1 million of E.ON’s 8 million accounts were arrears already and the company predicts a rise of 50% in October.
He estimated that almost 40% of people would end up in fuel poverty, meaning that duel bills would consume over 10% of their disposable income.
He had read emails from consumers on a regular basis, he listened in on calls, and honestly, some people were on edge, Lewis remarked on the BBC Sunday Morning show. They simply couldn’t pay, and things were only going to get worse.
He attributed the massive spike in gas prices, which also pushed up the cost of electricity generation, to Russia’s invasion of Ukraine. Last month, the price cap for consumer bills reached a new high of £1,971 per year from £1,277, and it is likely to reach at least £2,600 in October.
It had a huge impact, Lewis said, which was why they had urged the government to take more action. More involvement was required in October, and it must be significant, he added.
He urged that the warm homes discount be extended to twice as many households and that the rebate be increased from £140 to £600, pushing the government to “tax those with the broadest shoulders.”
He believed they would see greater prices for the next 18 months, he stated. That was already baked in, at least for October and possibly for the rest of the year. Longer-term developments, he thinks, would be determined by what occurs in the Ukraine conflict [and] how Russian gas flows evolve.
The goal of reaching net zero, according to the E.ON CEO, is “the long-term strategy to get off gas, to get off international gas pricing, and to drive down costs over time.”
Labour has reiterated its demand for a windfall tax on North Sea oil and gas companies. Lewis’ comments, according to shadow chancellor Rachel Reeves, underline how difficult the cost-of-living issue was for families, and how delays by the Conservatives would see the situation worsen.
The government must move quickly to reduce costs by imposing a windfall tax on oil and gas production profits.
Ministers have stated that such a tax will be considered among other options, however many have dismissed the concept. On Sunday, when asked directly about a windfall tax, education minister Nadhim Zahawi, told Sky News that they would look at all the choices.
Image via E.ON
