LAST UPDATE | 26 Aug 2022
BRITAIN’S ENERGY PRICE cap is to rise with less well off people set to be most affected.
Ofgem has confirmed an 80.06% rise in the energy price cap, sending the average household’s yearly bill from £1,971 to £3,549 from October.
The cap will come into effect for around 24 million households in England, Scotland and Wales on default energy tariffs on October 1, and will remain in place until December 31, when it will be adjusted again.
Ofgem’s chief executive Jonathan Brearley warned of the hardship energy prices will cause this winter and urged the incoming Prime Minister and new Cabinet “to provide an additional and urgent response to continued surging energy prices”.
The regulator said the increase reflected the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the Covid pandemic, and had been driven still higher to record levels by Russia slowly switching off gas supplies to Europe.
Mr Brearley said: “We know the massive impact this price cap increase will have on households across Britain and the difficult decisions consumers will now have to make. I talk to customers regularly and I know that today’s news will be very worrying for many.
“The price of energy has reached record levels driven by an aggressive economic act by the Russian state. They have slowly and deliberately turned off the gas supplies to Europe causing harm to our households, businesses and wider economy. Ofgem has no choice but to reflect these cost increases in the price cap.
“The Government support package is delivering help right now, but it’s clear the new Prime Minister will need to act further to tackle the impact of the price rises that are coming in October and next year.”
Boris Johnson has said that eventually energy bills will come down as Vladimir Putin’s ability to “exercise leverage over us and the rest of the world will diminish”.
The Prime Minister told broadcasters during a visit to South West London Elective Orthopaedic Centre in Surrey: “I think that we will do everything we can to help.
“We want to make sure that we get people through the next few months, and we can, and we will because we took the right steps. We have a big, big package of help and support.
“But the message I want to get over to people is that I’m afraid that there’s a global spike in energy costs driven by Putin’s aggression in Ukraine.
“Putin’s position, Putin’s ability to blackmail, to exercise leverage over us and over the rest of the world will diminish week by week, month by month, and we will get through this and in the end, we will be in a much better position.
“The other side will have more of our own UK energy to rely on, and the bills will eventually come down.”
Meanwhile, in Ireland, the regulator for utility companies yesterday announced a suite of new measures to protect electricity and gas customers this winter in the face of high prices.
The measures include an extension of the period during which customers cannot be disconnected and easing of debt repayment policies.
These efforts are being taken “in the context of the current volatility in global energy prices”, according to the Commission for Regulation of Utilities.
It comes following concerns aired by Minister Eamon Ryan over Ireland’s energy supply as we near winter.
Where the period prohibiting disconnection for customers currently runs from mid-December to mid-January, the CRU said this will now be extended to run from December 1st to 28th February.
The moratorium for vulnerable customers will be extended to six months from October 1st until March 31st.
For customers in debt, from November 1st they will have a period of two years in which they can repay.
The measures also affect how much a customer must pay under pay-as-you-go schemes for an outstanding debts.
Where energy companies could deduct up to 25% of any payment to offset a customer’s existing debts, from October 1st it will be fixed at 10%.
Another change is that suppliers will be required to “actively promote” policies to vulnerable customers.
The full details of these measures will be published shortly, the CRU said.
Its chairperson Aoife MacEvilly said the regulator “acutely aware of the significant challenges” that all customers have been contending with and “will be facing” this winter.
“While the current measures provide a high level of protection for all customers, our focus was to enhance protection and security for the customers in greatest difficulty, including vulnerable customers, customers in debt and customers on financial hardship prepayment meters,” she said.
“These requirements will remain in place for all suppliers subject to future CRU reviews, with the first of these reviews to be undertaken in summer 2023.”
The new measures were developed as part of the CRU’s contribution to the National Energy Security Framework that was announced by the Department of the Environment, Climate and Communications in April as a response to Ireland’s energy challenges arising from the war in Ukraine.
With reporting by PA
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