Energy prices: Government must show more urgency, says Ovo boss

Ovo's boss Stephen Fitzpatrick predicts the rise in wholesale gas prices and its impact on people will be "an enormous crisis for 2022". The business secretary is set to meet with Ofgem and energy firms on Monday. The government says it wants to make sure consumers are protected.

Business secretary Kwasi Kwarteng is expected to discuss recent rises in household energy bills with the chief executives of leading energy companies and the regulator Ofgem.

Mr Fitzpatrick, who is attending the virtual meeting, says his priority is for the government and the regulator to understand how critical the situation is.

He said the main worry was how consumers would be supported through price increases. "We've seen this energy crisis unfold now for the last three months and we've watched as energy prices have spiked, fallen back, and spiked again," he said.

"We've had more than 30 bankruptcies in the sector, we've had millions of customers forced to change supplier.

"The cost to the consumer has already been more than £4bn. We haven't seen any action from the government or from the regulator. There's an acceptance that there's a problem, but nowhere near enough urgency to find a solution," he added.

In recent months, wholesale gas prices have risen to unprecedented levels. Last week, they hit a new record of 450p per therm, which experts think could take average annual gas bills to about £2,000 next year.

On Thursday, Energy UK, the industry's trade body, warned bills could soar by another 50% unless the government intervened.

Mr Fitzpatrick said: "It is already households' largest single bill to pay and it is going to double that. And I think expecting consumers to shoulder that kind of volatility without any kind of support from government is just unrealistic."

'Urgent'
More than 20 energy companies have collapsed since wholesale prices started to spike, unable to pay high prices or pass the increased cost on to consumers. Nearly four million customers have been affected.

Consumers are protected from big rises in wholesale costs by a price cap set by the regulator Ofgem. However, the cap is due to change in April.

Mr Fitzpatrick said it was important "we don't waste any more time" addressing the rising cost of household energy.

"It is a really good sign of just how urgent everything is that we're meeting between Christmas and New Year to work this out," he said. "But we really have to take the opportunity today."

Labour has urged the government to use the money raised through higher than expected VAT receipts, driven by the higher cost of food and energy prices, to cut household energy bills.

Shadow chancellor Rachel Reeves said Labour wanted the government to immediately announce the removal of VAT from household heating bills over winter. "We need a sustainable and ambitious approach to energy," she said.

Mr Fitzpatrick also suggested the government could consider "taking away some of the environmental social policy costs that we have seen increase over the years and it may mean that we need some kind of price smoothing mechanism from the government". "These are all things that we are going to be discussing today," he said.

The government said: "We regularly engage with the energy industry and will continue to ensure that consumers are protected through the Energy Price Cap, which is insulating millions from record global gas prices."