Fuel poverty campaigners on Thursday hit out at a decision to pass on rises in wholesale gas and electricity prices to British households much faster after Ofgem confirmed the energy price cap would be altered every three months instead of twice a year.
The energy regulator insisted the changes were required to prevent another large-scale crisis in the energy retail sector following the collapse of more than 30 suppliers since January 2021 amid surging wholesale prices.
But the decision has deeply angered some fuel poverty campaigners, who argue that the current system — whereby the cap is altered only twice a year on April 1 and October 1 — protected households from the worst of the wholesale price increases over the critical winter period when gas usage soars as consumers fire up their heating.
The regulator, strongly criticised for allowing too many poorly capitalised companies to enter the market in recent years, has been accused of siding with energy groups rather than consumers.
Simon Francis, co-ordinator for the End Fuel Poverty Coalition, said the decision was “simply inhumane” and would force more people into fuel poverty in the middle of winter.
Peter Smith, director of policy and advocacy at the fuel poverty charity National Energy Action, said the move from twice yearly to quarterly price cap updates “wasn’t necessary” and would lead to further increases in domestic energy bills just after Christmas, “in the middle of heating season when energy costs are typically at their highest”.
“January is also usually a time of increased mental health problems and further hikes in bills will sadly lead to increased misery and huge anxiety for energy consumers across Great Britain, particularly for the poorest households,” added Smith.
Analysts have warned that the price cap, which dictates a maximum price suppliers can charge per unit of energy and limits their profit margins, could rise 70 per cent in October to almost £3,360 a year per household on average, before hitting more than £3,600 in January. The cap dictates bills for 24mn households.
Ofgem chief executive Jonathan Brearley acknowledged the situation was “deeply worrying for many people” but insisted: “The trade-offs we need to make on behalf of consumers are extremely difficult and there are simply no easy answers right now.
“Today’s changes ensure the price cap does its job, making sure customers are only paying the real cost of their energy, but also that it can adapt to the current volatile market,” he added.