Ovo founder unveils energy crisis plan and calls for urgent action

Credit: PA

The founder of gas and electricity supplier Ovo Energy has outlined proposals calling on the government to provide help with bills which would offer the most support to the poorest families.

Stephen Fitzpatrick has put forward a 10-point action plan to deal with the energy crisis, which would see support taper off for high earners using more electricity.

The average household's annual bill will rise to £3,549 from October 1, 2022, from the current cap of £1,971, regulator Ofgem has announced - the highest it has ever been.

The change means that householders on a typical default tariff will pay an extra £1,578 a year for their gas and electricity.

In the short-term, the firm has advised the government pay the £400 energy bills discount to households in full by Christmas.

All households in England, Scotland and Wales will receive £400 in energy bill discounts from October.

Under current rules, the support will be issued in six instalments over six months to some 29 million households.

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A Fuel Poverty Taskforce to identify those most in need by collecting data from charities, energy companies and government departments should be set up, the firm says.

While Ovo advises the government to limit the number of subsidised units of energy households receive in the "medium-term", as higher-income households typically use more energy, the firm advises that the Fuel Poverty Taskforce should support lower-income households that use more energy, like patients with at-home medical care.

Other short-term solutions include increasing the funding for debt advisory charities and consumer debt charities. Citizens Advice has seen an increase in people seeking advice on their energy bills rise by 1000%, the firm says.

Medium-term solutions also include abolishing the standing charge, which are fixed costs to customers the firm says creates the "greatest resentment", reducing bill increase shocks through "smoother" short-term increases and ensuring prepayment meter is the cheapest way to pay for energy.

The firm also urges the government to "insulate everything" as Britain's homes are some of the least energy efficient in Europe, the firm says.

Over the long-term, introducing a carbon tax to tax the profits of big oil and gas companies will be the "most-effective" way to reduce UK's dependence on fossil fuels and support a transition to Net Zero and reduced dependence on energy imports.

Prices were already rising before Russia invaded Ukraine, but since then the situation has worsened.

The firm says the government should bring back the Department of Energy and Climate Change as the current Department for Business, Energy and Industrial Strategy (BEIS) has "such a broad mandate that it is hard to see that energy could get the focus that it needs".

Lastly, Ovo says securing a mandate for energy retailers to buy their energy in advance would reduce the current "extreme price volatility" as the recent energy price cap has instead meant energy firms like Ovo are now buying their energy just three months in advance.

Bills would be lower if this mandate was secured, the firm says.

It also unveiled a £50 million support plan for its own 4.5 million customers, including debt repayment holidays for all prepayment meter customers, a 200% increase in emergency top-up credit for customers on a prepayment meter, as well as free technology and services, such as smart thermostats and boiler checks.Mr Fitzpatrick said: “Important and difficult decisions need to be made quickly. Some of these will need to take immediate effect, some in the months and years ahead. But we must start now."