Energy firms’ bid to put hundreds more on bills

Axe the £1,277 cap or more will go bust, claim providers

ENERGY giants are bidding to raise bills by hundreds of pounds claiming they are losing up to £1,000 a year on each household.

The shocking figure comes from the boss of Scottish Power who is predicting as many as 20 energy suppliers are likely to go bust in the next few weeks.

The company’s chief executive Keith Anderson said a government price cap on tariffs means energy companies are currently paying much more for gas and electricity than what they are allowed to charge customers.

As a result, he is calling for the cap – which is set by the regulator Ofgem and revised every six months – to be abolished. The cap is currently set at £1,277 a

‘People should be paying the actual costs’

year based on normal use for a typical household, however Mr Anderson argues bills should be much higher to match wholesale prices.

He wants a new price control regime that offers a special low tariff for households in poverty but, for everyone else, he said: ‘People should be paying the actual cost of the gas and electricity that we use and gets supplied to us.’

Under this scenario, millions of customers would currently be paying many hundreds of pounds more for heat and light every year.

On bills, he said: ‘Prices have gone up this month, they are going to go up in April, they will likely go up in October and possibly even into the year after.’

Twelve energy firms have gone bust so far this year and Mr Anderson believes even more companies are about to fail in a ‘massacre’ of suppliers.

Millions of customers will have to be switched to a new supplier, but he said the receiving companies will make a loss of around £1,000 a year on every household because of the cap.

In theory, the losses can be recouped through a levy on all bills over several years, however Mr Anderson said this will not avoid an immediate cash crisis. He told Sky News: ‘We expect, probably in the next month, at least another 20 suppliers will end up going bankrupt.

‘We are now going to start seeing some relatively well-run, good, commercially-sound businesses going bankrupt because they just cannot pass the cost of the product through to customers.’

He added: ‘We are estimating that between now and April, this could end up costing the industry £4-5billion.

‘That is going to put so much financial pressure on the remaining companies in the sector that a whole load more will go bankrupt.’ Scottish Power, which is owned by the Spanish company Iberdrola, is Britain’s fifth largest energy supplier with around 8 per cent of the domestic gas supply market.

Regulator Ofgem said: ‘[We are] working closely with government and industry to ensure that customers remain protected. We have robust systems in place to ensure this.

‘The price cap will remain in place this winter to protect millions of people from the sudden increases in global gas prices.

‘We are also working with government to ensure that we have a sustainable energy market that works for all customers.’