Things just got tougher

Things just got tougher

The energy regulator Ofgem has today announced an £96 increase to the energy price cap. The increase is likely to result in suppliers putting their prices up in the coming weeks before the new cap level takes effect in April.

Frazer Scott, Chief Executive of fuel poverty charity Energy Action Scotland comments:

“If energy suppliers respond by increasing their prices up to the new cap level, then over 1 million households in Scotland will pay substantially more for their energy.

These price changes hit the people on the lowest incomes and in the worst housing the hardest. Regardless of the reasoning behind the increase the impact on hard pressed families is simply unfair. Heating a poorly insulated home costs over £50 a month more than a decent home. If bills rise by around £100, far too many households will be faced with the increasing challenges, they need to heat and eat. There has been a dramatic increase in demand for support at foodbanks and advice services are seeing increasing numbers of people concerned about their energy costs.

It is incredibly hard on prepayment customers who cannot switch and should not have been included in this cap. Households in fuel poverty need greater protection from price rises, immediate help with lockdown bills and help to reduce growing levels of debt. We need to do more to reduce inequalities and the impact that unaffordable energy has on the health and wellbeing of the most vulnerable.”

Frazer Scott, Chief Executive Officer

Notes to editors

  1. Energy Actions Scotland is Scotland’s only dedicated fuel poverty charity. We work closely with our members and partners across the UK to ensure the right to live in a warm dry home and eliminate fuel poverty. For more information visit www.eas.org.uk
  2. Today’s announcement by Ofgem can be found here: https://www.ofgem.gov.uk/publications-and-updates/energy-price-cap-increase-april-consumers-should-switch-save-money.
  3. Energy Action Scotland is deeply concerned about the collision between the impact of cold homes and COVID19. Scottish Government estimates suggest that fuel poverty in Scotland is set to rise from approx 24%  to 29% of households. Nearly doble that in England. The following five main impacts are already badly low-income consumers across:
  • An increase in energy use, due to more people spending more time at home
  • A reduction in income, as many jobs were either lost or placed on furlough
  • Increased affordability issues and therefore debt, leading to energy rationing
  • Reductions in smart meter and energy efficiency installations
  • Difficulties in accessing support, especially where households are digitally excluded or only speak English as an additional language

This is exacerbated by the quality of housing and the diverse mix of energy consumed in Scotland’s households where we have significantly higher proportion of households in off-gas areas which dramatically increases the costs of heating as they use electricity, solid and liquid fuels.

4. Whilst Ofgem have limited scope to keep the Default Tariff cap lower given the current primary legislation within the Domestic Gas and Electricity (Tariff Cap) Act 2018, Energy Action Scotland has contested the decision to roll the more generous and bespoke Pre Payment Meter Cap into the wider Default Tariff cap which is less beneficial to PPM customers. This is because:

5. PPM customers have far fewer options to switch either supplier or tariff and therefore can’t avoid the consequences of a higher cap which PPM suppliers nearly always subsequently price too.

  • Legacy prepayment customers should not have to pay the same level towards the costs of smart metering, as until recently there has been little prospect to date of them receiving a smart meter from most suppliers.
  • There is no need for headroom as competition for PPM customers is currently minimal due to factors other than price.