Exclusive: EDF calls for historic intervention to ease soaring energy bills
One of the UK’s biggest energy suppliers, EDF Energy (EDF), has urged the Government to ramp up support for households this winter with a four-phased intervention in the energy market.
Phillippe Commaret, managing director for customers at EDF, warned that the price cap announcement tomorrow could condemn half of UK households to fuel poverty – with Ofgem expected the raise average energy bills to at least £3,500 per year from October.
He told City PM the Government should cut VAT, offer households a £400 discount from October to December, roll out a nationwide insulation scheme, and bring in a deficit fund from January to freeze energy bills.
Without such support, he feared half of UK households could fall into fuel poverty – paying 10 per cent of their income on energy bills.
Commaret said: “We need to start thinking about the consumers. There is a point where bills are not bearable. I think there is a very large consensus on the fact that [when bills reach] beyond 10 per cent of your disposable income, it’s very difficult indeed to pay for your energy.”
Ofgem is set to announce the next update to the price cap tomorrow – dictating average energy prices from October to December.
It is widely expected average bills will rise above £3,500 per year, while multiple forecasters expect bills to peak above £6,000 next year – with Auxilione predicting they could climb as high as £6,823 per year in April 2023.
In such a crisis, Commaret believed it was beyond the ability of customers to adjust their energy usage with such high bills, and said the crisis was now “affecting the health and safety of our customers.”
EDF’s proposals would represent a historic market intervention, rivalling the costs involved in supporting households and businesses through the pandemic.
It follows calls from Scottish Power for a £100bn deficit fund – where suppliers would take state-backed loans to cover the difference between the current price cap and rising wholesale costs.
Customers would instead be charged today’s price cap, and would pay back the excess wholesale costs over a 15 year period rather than 2-3 years.
Commaret also urged the Government to incentivise Brits to enhance the insulation in their homes, with the UK’s housing stock among the least energy efficient in Europe.
The managing director noted that the average insulation age of UK homes was 1976 – making the country nearly 50 years out of date with insulation.
He said: “Nobody would have would buy a car from 1976. Nobody would continue to have a boiler that has been installed in 1976. Nobody would have a kitchen that lasts from 1976 and, still, nearly two thirds of UK households have insulation equivalent or below 1976.”
He highlighted that loft insulation and cavity wall insulation could each provide £600 per year savings for households, with around eight million households lacking such innovations in their homes.
Consequently, the managing director did not understand why energy efficiency was “a bad word” and the lack of information for consumers when helpful messaging could help customers reduce their bills.
Commaret concluded: “Customers are not investing into energy efficiency in the UK, and the reason for that is that we do not put enough communication, enough help, and enough support for customers to invest into energy efficiency.”
EDF is one of the big five suppliers in the UK, home to over five million customers.