For immediate release
Contact: Mike Potter, NEA Communications and Campaigns Officer (firstname.lastname@example.org) Mobile: 07595410756
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.
Adam Scorer, Chief Executive of fuel poverty charity National Energy Action (NEA) comments:
“If prices rise anywhere close to the new cap, then desperate situations will become much, much worse.
“People on the lowest incomes and in the worst housing are always hit hardest. Heating a poorly insulated home costs around £50 a month more than a decent home. If bills rise by around £100, millions of households have two stark choices; stay cold or fall further into debt.
“Most prepayment customers cannot switch and should not have been included in this cap. Available support is valuable, but not enough. Households in fuel poverty need greater protection from price rises, immediate help with lockdown bills and help to reduce growing levels of debt”.
Notes to editors
- NEA works across England, Wales and Northern Ireland to ensure that everyone in the UK can afford to live in a warm, dry home. For more information visit https://www.nea.org.uk/.
- 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.
- This winter, NEA is deeply concerned about the collision between the impact of cold homes and COVID19. The following five main impacts are already badly low-income consumers across GB:
- 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
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, NEA 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.
Further background on these issues can be found in our response on the Ofgem website. See: https://www.ofgem.gov.uk/system/files/docs/2020/05/nea_response.pdf