The UK Government should improve its response to future energy price spikes as households face “world-beatingly high” bills, Parliament’s spending watchdog said.

Electricity bills in 2023 were the highest among comparable countries, with consumers owing £3.7 billion for gas and electricity in 2024, more than double the amount in 2021, the Public Accounts Committee’s report said.

The PAC urged the Department for Energy Security and Net Zero (DESNZ) to improve support for households vulnerable to fuel poverty and create a clear plan and timeline for policy decisions to make bills cheaper.

Chairman of the committee Sir Geoffrey Clifton-Brown said: “Sharp moves in energy prices in the future must find Government fully prepared to issue targeted and effective support, with those most in need the focus of that support.

“We cannot see a repetition of precious funds being beamed out across the spectrum to those who do not require help.

“This approach is all the more important when our report shows some households remain exposed, at a time when the UK’s electricity bills appear world-beatingly high and debt weighs down bill-payers’ finances to an alarming degree.”

‘Slow to learn’

The PAC said the DESNZ has been slow to learn from past energy price spikes and cannot yet target support effectively, as some people who did not need help still received aid from the £44 billion energy bill support schemes.

It urged the DESNZ to develop more financial support for consumers in time for next winter, saying the department and energy regulator Ofgem “are not doing enough” to ensure people falling into debt with their energy bills receive proper advice and support.

The report read: “We remain concerned that even after the crisis has subsided, UK electricity bills are the highest of the countries providing comparable data to the International Energy Association.

“The UK had the highest electricity price out of 25 countries reporting both domestic and industrial electricity prices in 2023, (including taxes and levies) and electricity is currently four-times more expensive than gas.

“Despite repeated promises, the department has delayed taking action to rebalance energy prices by shifting the cost of environmental levies from electricity to gas.

“In addition, the department is reviewing how electricity prices are set for households so that they can benefit from cheaper rates if demand is low or when the weather means more energy is produced.

“But this review has been running for three years and remains on an uncertain timetable, meaning it is unclear when consumers will start to see the benefits through reductions to their bills.”

Plan

The PAC said the DESNZ must do more to convince Parliament that it has a “robust plan” for ensuring security of energy supply amid increasing global tensions.

An Ofgem spokesperson said: “We know the cost of energy is a huge challenge for many households.

“If anyone is worried about paying their bills, we urge them to contact their supplier or groups like Citizens Advice to make sure they’re getting all the help they can. Switching or fixing tariffs now, where possible, could also help consumers to bring costs down.

“We’ve introduced tougher rules to make sure energy companies do more to spot the signs when a customer may be struggling and step in to offer support, including working out affordable payment plans and providing emergency credit to reduce the risk of self-disconnection.

“We have also made pre-payment meters the cheapest way to pay for energy, and are consulting on plans to introduce a scheme that could provide direct support to those struggling with unmanageable levels of debt.

“We continually monitor the service suppliers are providing to their customers and where they are falling short, we hold them to account. However, the issue of debt is one that requires action from everyone across the sector and government.”

Price shocks

A Department for Energy Security and Net Zero spokesperson said: “Our mission for clean power is the only way to protect UK billpayers from future price shocks.

“The 2022-23 energy crisis, which saw sky-high energy bills and put pressure on households and businesses across the country, was a product of our reliance on gas for heating and powering our homes. We will bring down bills for good by moving towards a clean, homegrown power system that we control.

“We are also rolling out support for consumers, including through proposals to expand the Warm Home Discount to almost three million more households next winter, and allocating £1.8 billion of funding to create warmer, more energy-efficient homes across England.”  Source: Nation.Cymru