Heads of four of the UK’s power providers have warned that the next price cap hike in October will be ‘horrific’ for many families and urged the government to introduce emergency measures to alleviate the problems.
Speaking to MPs, the chiefs said they expected a surge in the numbers classified as being in in fuel poverty based on the experience of April, the last time the cap was raised.
People on fixed-rate tariffs were shielded from that rise, which averaged £693, but as these contracts end they will be faced with the full cost and a further rise in October likely, factors likely to lead to a big rise in customers in financial distress.
Energy consultant Cornwall Insight is predicting there will be another £500 rise in the cap due to the cost of gas soaring after Russia’s invasion of Ukraine and that will take the total cap to around £2,470 from £1,971 currently.
ScottishPower chief executive Keith Anderson called for the energy cap to be replaced with a new social tariff that would mean people earning more pay more.
He also wants a social fund set to allow the poorest users to pay off £1,000 from their bills over ten years.
"I think the problem's got to a size and scale where it requires something significant ...that puts their bill back to where it used to be before the gas crisis", he explained.
E.ON boss Mike Lewis added that up to 40% of households faced fuel poverty from October, adding that the Council Tax rebate and energy loan already announced should be augmented by the removal of VAT and green levies from energy bills.
Not being able to pass on the costs of soaring gas prices has seen almost 30 independent suppliers go to the wall.
The founder of Bulb, one of the largest that failed, told MPs that its collapse would likely cost the taxpayer £3bn.
Hayden Wood, who is still chief executive, said that the supplier would not have been able to survive the losses of supplying customers at 400p per therm.
He said the focus now was to sell the business and minimise the cost to taxpayers.
Another failed supplier Avro is expected to cost £700mln to rescue said its boss Jake Brown.
British gas owner Centrica has taken on many of the customers of the failed suppliers and Chris O’Shea, its chief executive, said around 716,000 customers were in debt of £440 on average compared to 125,000 a year ago.
He also urged the Insolvency Service to "pursue managers, the directors, the executives of every failed company".