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Octopus Energy CEO questions whether support can help families with rising bills


Octopus CEO Greg Jackson has expressed concerns that current plants to protect consumers from skyrocketing energy bills may not materialise.

The energy market is currently facing some of the highest wholesale costs on record, due to unprecedented demand from Asia and low wind-farm output in Europe over the last 18 months. There are also concerns that the current standoff on the Ukraine-Russia border could push prices even higher

So far, UK households have already seen bills rise by 12% in October, when the energy price cap - a figure set by Ofgem to limit how much suppliers can charge customers - was last reviewed. However, April's readjustment is expected to push bills much higher. 

According to industry experts Cornwall Insights, the price cap could rise by around 50% and if that happens, it would mean an extra £650 per month on average household energy bills. 

In an email to all his customers, Jackson suggested that the only way to "make a real difference to all customers" would be spreading the costs over a few years.

"Spreading the cost of this sudden spike over several years will allow us to make the imminent April rise much, much smaller - more like £12 per month - and adjust prices to gradually cover the cost over time,” he said in his letter.

"And with the benefit of time, the gradual rises are likely to coincide with falling wholesale prices, making the effective increase much smaller, and eventually dropping below current prices.”

However, he conceded that despite extensive conversations between rival firms, Ofgem and the government, shielding customers from the worst of the bill increases would be challenging. Previously, Jackson has thrown cold water on ideas like removing green levies from bills, cutting VAT and expanding the Warm Homes Discount. All of which, he said, will not provide adequate relief for households.

The idea of allowing energy bills to be spread out over a longer period is currently being considered. If it went forward, it would give energy suppliers access to loans, which would in turn allow them to increase bills gradually, rather than all at once. However, making public money available to suppliers has so far faced resistance from both the treasury and the Institute of Economic Affairs. 

With many ideas on the table, a consensus will need to be reached sooner rather than later. The price cap is set to rise in April, and unfortunately coincides with a cut to universal credit and a 1.25% increase in National Insurance. Should all three go ahead unchecked, households face a significant cost of living increase.

Michael Quinn
Michael Quinn

Michael is a dedicated author helping usave to write guides, blogs and news for the last four years. When not writing articles, you can usually find him at wine tasting events or having a political debate on the night tube.

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