ScottishPower chief calls for urgent bills support for poorest over energy crisis

Energy firm chief executives have told MPs investigating energy prices that there needs to be "unprecedented" measures to prevent a fuel poverty crisis next winter.

Mr Anderson said the effect on further predicted price rises in October will be "truly horrific" and that the size and scale of the problems was "beyond what I can deal with".

Around 1.5m Scots households are to see their energy bills soar by up to £693 a year after the regulator Ofgem hiked the price cap by the biggest increase yet.

READ MORE: Postcode lottery: Emergency support call as Scots face UK's highest energy bills

From April 1, the three in four customers on default tariffs paying by direct debit saw an increase of £693 from £1,277 to £1971 while the rest who are on prepayment meters - and tend to be among the most vulnerable - have seen a rise of £708 from £1,309 to £2017.

The sharp 54% rise, which will impact half the population, was said to be driven by a record rise in global gas prices, with wholesale prices quadrupling in the last year.

Chief executives told the BEIS committee that while pre-payment customers were already being hit hard from the effects of rising bills, they expected the numbers in financial distress to only increase as the months go on ahead of another expected leap in the energy price cap from October.

And Mr Anderson call for the cap system - blamed for the failure of dozens of competitors as they were unable to pass on huge rises in raw energy costs - to be scrapped in favour of a social tariff that would see the better off pay more.

He also suggested that, in the interim, a deficit fund should be established to allow people 10 years to pay off £1,000 on their bills.

"My biggest concern is actually when we get to October, particularly around the most vulnerable and the poorest, and that tends to match with people on a prepayment meter. In June in the summer, their consumption will go down, so their bills will be more manageable.

"Come October, that's going to get horrific, truly horrific, and it's got to a stage now where I honestly believe the size and scale of this is beyond what I can deal with. It's beyond what I think this industry can deal with. And I think it needs a massive shift, significant shift in the government policy and approach towards this."

He said a help line launched by ScottishPower last week received 8000 calls from people airing concerns about ability to pay.

"There's a massive concern from people, a huge amount of anxiety for people on the phones about what they're going to do and the concern they face," he said. "And there's a real real worry from a lot of people for the first time facing this issue. They've never been in this position before.

"All we're doing with people to is to encourage them to talk to us to speak to us, because that's the way we can help them and that's what we need people to do is to keep contacting us."

He indicated the fund could be paid off by the rest of customers who can afford their bills or the government could partially fund it.

"I think the problem has got to the size and scale that it requires something significant of that nature, where for those people who are deemed to be in poverty, fuel poverty or vulnerable need something that puts their bill back to where it used to be, before the crisis, you can then spread out over a 10 year period across the rest of the customer base," said Mr Anderson.

"And then to me, that's stage one of moving to a social tariff, which is what I think this country needs to have. And we should implement it when we get a bit more stability, and a little bit less volatility in the market.

"The cap should be changed to be a social tariff targeted to discount the price to people in poverty.

"Right now people in a prepayment meter pay more and that is perverse and a social tariff should be brought in to discount the price for people in fuel poverty and people in a prepayment and the cost of that should be borne by those who can afford to pay."

Chris O'Shea, the boss of Scottish Gas-owner Centrica, said that the UK's largest supplier had seen a rise of 125,000 households in debt over the past 12 months.

It meant, he said, that 715,000 people owed money to the company across the UK already and warned the number would continue to climb.

E.ON chief executive Mike Lewis, supported calls for more support and said the government needed to do more than the council tax rebate and energy loan already announced, by removing VAT and green levies from energy bills in the short term.