The boss of one of Britain's biggest energy firms has warned many households are already “seriously struggling” even before what he warned would be a “bad” price hike in the depths of winter.
Keith Anderson, chief executive of Scottish Power, said the scale of crisis meant the government would need to consider emergency support in this month’s Budget.
It comes as Ofgem’s price cap is set to surge by a forecast 16% to more than £2,000 a year in January, driven by an energy shock caused by the Middle East war.
Warning of 'another huge rise in bills'
Mr Anderson said all the indications were that there would be "another huge rise in bills" in January, "we can see how that is going to be."
He added: "The reality is that the most vulnerable people in our country need further support and they need that support this winter. Many of them are genuinely seriously struggling to pay what is due."
His comments come amid growing expectations Chancellor John Healey will unveil targeted help - rather than support for all households - in his Budget on October 28. The most likely option is extending the £150 Warm Home Discount to more people who are on means-tested benefits. Another possibility is that the temporary £45 a year saving for all households through axing VAT on electricity bills will be extended.
Debt mountain heading towards £7billion
The threatened price spike comes against the backdrop of a customer debt mountain, which already stands at £6billion and is heading towards £7billion.
Mr Anderson called it "one of the biggest challenges facing the industry", with debts owed to suppliers meaning he was "more worried than I have ever been" about the sustainability of such firms.
"We are reaching a point now where the debt owed is neither fair to those who are having to pay it, and is not sustainable for the companies carrying it," he said in a speech at trade body Energy UK in London.
He said it was time to separate those customers who genuinely "can't pay" from those who "choose not to pay". "We are heading into a doom loop where we are asking today's billpayers to pick up the cost of others," Mr Anderson added. "We are getting to the point where we can't wait any longer."
Solutions proposed
Speaking to the Mirror later, Mr Anderson said as much as 35% to 40% of the debt was owed by tenants in rented accommodation who use energy but leave before suppliers are able to properly bill them for what they use. One solution he said could be speeding up the process of tenants registering with a supplier by, for instance, giving them a few days to do so after moving in. Another problem he said was being able to identify households who would benefit from having a prepayment meter fitted.
Another of Mr Anderson's suggestions would be to bundle up a chunk of the debt - potentially up to £4billion - which is then sold on and recovered from billpayers over a much longer period, 10 years or longer.
