Energy Reset: Suppliers cannot tackle crisis alone

As part of Utility Week’s Energy Reset campaign, we present a series of perspectives on tackling the cost of living crisis. EDF’s retail managing director, Philippe Commaret, warns the crisis is too big for the sector to handle on its own. For EDF, the overriding priority is convincing the government to provide immediate targeted support for consumers.

Households are facing extreme financial pressures this Spring. Inflation is increasing and wholesale energy costs have risen by 500% over the past year, with many European countries already taking steps to mitigate some of these increases for their citizens.

Here in the UK, the price cap has insulated customers from much of the problem. However, the upcoming price cap announcement will confirm that this period of insulation is ending and we know that further increases will be simply unaffordable for households who are already struggling to pay their bills.

Despite the turmoil in the market and financial pressures we’ve been facing, we are continuing to provide financial support to customers.

EDF was the first energy supplier to introduce a fund specifically to support customers struggling to pay their bills. Last year we committed £3.7 million to partnerships including Citizens Advice Plymouth, National Energy Action, Income Max, MacMillan Cancer Support and SHINE, in addition to delivering £2.1 million in debt relief to our customers.

We have also developed a new customer support programme, titled ‘CARE’, keeping our focus firmly on the customer: Cost – seek to help customers reduce the cost of their bills, Affordability – understand the customer’s ability to pay for their energy, Resolution – seek to agree a positive, sustainable solution, Extra Support – check if the customer would benefit from extra support.

However, we know that the support we offer will not be enough, with the problem too big for suppliers to tackle alone. EDF analysis shows that the 10% of British households with the lowest incomes will see the proportion of their total outgoings spent on energy in 2022 nearly doubling to £1 in every £7. For that reason, our overriding priority right now is convincing government to provide immediate targeted support to protect those households who simply cannot bear this increase.

Higher energy bills since October will have generated more revenue than usual from taxes, carbon permits and other sources. For example, VAT receipts from residential energy bills will be around £170 million higher from this winter than last. If these additional receipts were distributed to the 2.2 million households who receive the Warm Home Discount, that would provide an immediate rebate of around £80 per household. If energy prices remain high then associated tax revenues will also remain high, and this model could be repeated to provide a further payment to financially vulnerable customers at a later date.

We are also urging government to not wait until its Spring Statement to announce support. The situation for vulnerable customers is already critical and these customers need reassurance now that they will be protected against something which is completely out of their control. A lack of action by government before Ofgem’s price cap announcement will cause undue stress and confusion for customers.

There are, of course, many ideas and discussions happening on how we can help customers and fix the market. We are already working with Ofgem and other suppliers to find ways to defer the £1.8 billion impact of failed companies, reducing energy bills for this Spring whilst keeping costs of any mechanism minimised.

We’ll continue working closely with government and Ofgem to make sure that a strong, sustainable and resilient energy sector, which is intrinsic in delivering net zero, can emerge from this crisis. But for here and now – we must focus our efforts on those in society who need us most and we implore the government to act now.