Coronavirus: Energy industry in talks with government for state support
The UK energy industry is in talks with the government over a rolling aid package to help protect vulnerable households and businesses from the coronavirus pandemic.
Industry body Energy UK said that it was leading talks with the government over the additional financial support the sector might require.
The Financial Times reported that energy companies are seeking a loan facility of £100m per month from the government in order to give payment holidays to under pressure customers.
A growing number of households have reportedly begun to cancel payments to suppliers, which could put companies under significant financial pressure.
Even before the crisis began, the energy industry had been rocked, with 19 smaller suppliers having gone out of business since 2016.
Supplier profits will be squeezed even further from tomorrow, when Ofgem will reduce the energy price cap for around 11m customers by £17.
That will leave the default price cap at £1,162 for April to September, down from its previous level of £1,179. Ofgem said 11m households will benefit from the lower cap.
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Earlier this month, the industry announced emergency measures in partnership with the government to protect vulnerable customers through the coronavirus uncertainty.
Under the protections, customers with pre-payment meters who are not able to add credit can speak to their supplier about options to keep them supplied.
This is expected to benefit over 4m customers in the UK.
In addition, any customer in financial distress will also be supported by their supplier, which could include debt repayments and bill payments being reassessed, reduced or paused where necessary, while disconnection of credit meters will be completely suspended.
An Energy UK spokesperson said: “In addition to suppliers’ efforts to provide additional help and support for customers in vulnerable circumstances and those on prepayment meters, there are also going to be many more households and businesses than usual who will struggle to pay for essential services like energy bills.
“On behalf of the industry, we are leading discussions with the Government on what additional financial support could be required to help these customers over the coming months.”