Scottish Power boss warns of huge winter energy bills

Scottish Power's boss has warned that energy bills are likely to go up by nearly another £1,000 for millions of households. Photo: PA
Scottish Power's boss has warned that energy bills are likely to go up by nearly another £1,000 for millions of households. Photo: PA (PA)

Energy bills are on track to surge to almost £3,000 by the end of the year, the boss of one of the UK’s biggest energy suppliers has warned.

Keith Anderson, who leads Scottish Power, urged the government to enter emergency talks over tackling the “crisis” of soaring electricity and gas costs as he called called for the poorest people in the country to get £1,000 off their energy bills amid warnings that four in 10 could fall into fuel poverty in October.

“You need to be in a position to name a solution in July if there’s going to be time to devise a method of implementing it in time for October. It will be monumentally complicated. The key thing here is urgency and speed,” he said.

He said the government’s plan to give each household £200 towards their energy bill — a sum that will need to be paid back — will be insufficient.

Read more: Cost of living crisis: Energy bosses warn of 'horrific' October price rises

“Given what’s going to happen in October, we think that urgent action is required to put in place a mechanism to support customers through this period,” he said.

“You require a sum of about £1,000 to start bringing bills back closer not to where they used to be, but closer to where it’s realistic to expect people to be able to pay them.”

Energy groups have warned that up to 40% of households could end up in fuel poverty in the coming winter as households are being warned to brace for a further rise of more than £900 in their annual bills this year.

In October, Anderson expects the cap to rise to between £2,500 and £3,000, which he predicts will lead to a wave of people unable to pay bills.

Anderson had called for a social tariff in April when the heads of the UK’s energy suppliers told MPs of horrific consequences for many households if prices rise again.

"We need to be realistic about the gravity of the situation — around 40% of UK households, potentially 10 million homes, could be in fuel poverty this winter," Anderson said in an interview today with the BBC.

Anderson renewed his call for “targeted” support for the most vulnerable customers. This could be for customers with pre-payment meters, those on universal credit, or those eligible for the warm home discount.

Scottish Power has proposed a “deficit fund” that would knock £1,000 off the energy bills of those most in need. This could include the 8 to 11 million households that will find themselves in fuel poverty, or those in receipt of universal credit.

Households on pre-payment meters and those in receipt of benefits would be eligible for the discount, he added.

He said there are several different ways for the £1,000 to be funded.The money would be paid down over a decade by adding £40 a year to all household energy bills. It is hoped that bills would come down over time as wholesale market prices fall back towards historic norms.

“If you wait until October to help people, you end up having to rush through a very blunt solution that probably doesn’t tackle the problem,” he said.

Read more: UK energy strategy: Plans will not tackle spiralling bills for five years

To date, the government has said it will offer extra relief of £150 in April via the council tax system in England, and in October customers in England, Scotland and Wales will receive a £200 rebate on their energy bills.

They will have to repay this at £40 a year for five years, starting in April 2023.

Bills for the average household whose tariff is tied to the energy price cap rose to £1,971 on 1 April after the price of gas soared over previous months.

Ofgem told the BBC that it is "too soon" to predict the level of the price cap from October.

Watch: Why are gas prices rising