NEA already seeing winter demand levels for services

National Energy Action (NEA), a charity which helps fuel poor customers, has said demand for its services is already at levels typically seen in the winter months.

The charity’s director of policy and advocacy, Peter Smith, was speaking as analysts at Cornwall Insight predicted that the price cap on default tariffs will remain “well over” £3,000 until “at least” 2024 following the next increase in October.

Ofgem is due to announce the next level of the cap later this month and while he did not give exact figures, Smith told Utility Week that staff are already reporting high call volumes.

“We’re at the height of summer and experiencing the sort of level of demand for our services that we usually associate with late autumn and the beginning of winter,” he said.

NEA has previously warned that more than 8 million households – one in three in the UK – are expected to fall into fuel poverty following October’s price cap increase.

Smith said the demand on charities across the sector is going to be “overwhelming” during the coming months as more people find themselves needing help.

He continued: “It isn’t going to be possible for any charity, even a medium sized advice provider like our own, to meet the demand that’s going to be there this winter. It’s really vital that we don’t set that expectation either externally or amongst our staff that that’s the intention.

“We will be able to do a limited amount with the resources and capacity that we have got as charity.

“Any temptation to be more heroic than that is going to be fraught with disappointment because it’s going to hit everybody like a tidal wave – every charity, every local authority…it’s going to be overwhelming. Trying to pretend it’s going to be someway managed isn’t realistic, sadly.”

Smith added that the charity is acting to pre-empt this coming wave and put the support in place for its staff to try and provide the “best services that we possibly can” despite the “huge upturn” in demand.

Meanwhile Fuel Bank Foundation, which provides fuel vouchers to vulnerable customers, told Utility Week it too is seeing increased demand and that higher energy costs are reducing the impact of its services.

Matthew Cole, head of the Fuel Bank Foundation, said: “Following the April price cap increase we saw record numbers of people accessing our services, with more than 1,000 people being helped every day. If fuel prices continue to rise as predicted and remain high for the foreseeable future, we expect this number to increase even further as the financial toll forces families to breaking point.

“Higher fuel costs also negatively impact the effectiveness of the support we provide. A £49 fuel voucher, on average, would provide around two weeks’ worth of energy but that has been reduced to four or five days.

“What people need is surety of the price they will pay for their energy and surety of the support they will receive to get them through the winter, neither of which they currently have.

“Without further government intervention to support the most vulnerable, the harsh reality is that people will die this winter.”

On Tuesday (2 August), analysts at Cornwall Insight published their latest forecasts for the price cap, predicting that it will increase by more than 70% from its current level of £1,971 to £3,359 for the fourth quarter of 2022.

The consultancy forecast the price cap to rise further still to £3,616 for the first quarter of 2023. It said the typical household energy bill is expected to remain “well over” £3,000 per year for at least 15 months, peaking at £3,729 in the second quarter of 2023 before dropping to £3,569 in third quarter and £3,470 in the fourth.

Craig Lowrey, principal consultant at Cornwall Insight, said given the trends in the wholesale market and the concerns over Russian supply, the “only change to the prediction is likely to be up”.

He added: “While the government has pledged some support for October’s energy rise, our cap forecast has increased by over £500 since the funding was proposed, and the truth is the £400 pledged will only scratch the surface of this problem.

“Our new figures show that even increasing support for October will not make much of a dent in what is likely to be a sustained period of high energy bills.

“A review of delivering support for the next cap periods should be on the top of the to-do-list for any incoming Prime Minister. As our price cap breakdowns show, tinkering with VAT and policy costs will only make a dent in bills, when it is the high wholesale prices behind the increases.”

Source: Cornwall Insight