Electricity prices are on track to jump by a fifth over the next four or five years, according to the UK’s biggest energy supplier.
Octopus Energy’s Rachel Flecther told MPs that the Government should urgently consider changing how wholesale gas prices drive changes in UK energy costs in order to help British households.
Energy bosses also blamed “complex regulations” for the UK having higher wholesale energy prices than some other European countries, during an Energy and Net Zero Select Committee session.
The warnings come two weeks after the energy price for a typical household in England, Scotland and Wales increased by 2%.
The energy bill for the average household paying by direct debit for gas and electricity increased from £1,720 to £1,755 per year.
On Wednesday, Ms Fletcher, director for regulation and economics at Octopus Energy, said the calculation of gas prices within the UK wholesale energy market needs to be looked at.
She said: “There are proposals on the table we think the Government should be looking at to take gas out the wholesale market and put it into a strategic reserve.
“I think that needs very serious and urgent consideration.
“If we continue on the path that we are on right now, in all likelihood electricity prices for a typical customer are going to be 20% higher in four or five years’ time than they are now, and that’s even if wholesale prices halve.”
Meanwhile, Simone Rossi, the chief executive of EDF UK, called on the UK to ease regulatory burdens in order to help bring energy prices lower.
He said: “The point is that bills are very high and there are things we can do to reduce them.
“From point of delivery, the cost of serving customers in the UK is about £100 per annum, and in France it is 45 euros, so more or less half.
“This is not to do with wholesale price or gas marginal costs but is driven by the fact we have a very complex regulation which has become more sophisticated over the years.”
A Department for Energy Security and Net Zero spokesperson said: “We categorically reject this speculation.
“Wholesale gas costs for households remain 75% higher than they were before Russia invaded Ukraine in 2022, and the main reason energy bills remain high.
“The only way to bring down energy bills for good is by making Britain a clean energy superpower, which will get the UK off the rollercoaster of fossil fuel prices and onto clean, homegrown power that we control.”
