Energy / Record energy price cap rise sparks concern
MORE concern has been raised over the impact of rising energy prices – with Northern Isles MP Alistair Carmichael it is “not welcome to say the least”.
On Thursday regulator Ofgem confirmed there will be a record 54 per cent hike on the national energy price cap from 1 April.
The price cap limits the rates a supplier can charge for their default, standard tariffs. Those on fixed-term contracts are not affected.
Ofgem said the increase is “driven by a record rise in global gas prices over the last six months”, with wholesale prices quadrupling in the last year.
The price cap rise is set to affect around 22 million energy customers in the UK.
Shetland is, of course, one of the areas worst off in Scotland for fuel poverty, which is when 10 per cent of a household’s income is spent on heating to a satisfactory level.
Figures from last year showed that 31 per cent of Shetland households live in fuel poverty and 22 per cent suffer from extreme fuel poverty – when 20 or more per cent goes towards heating.
Research from the Scottish Liberal Democrats suggests Shetland is in line to have a large increase – £1,528 – when it comes to the average annual electricity bill in the isles.
UK chancellor Rishi Sunak announced later on Thursday a range of support measures designed to help people with rising costs, including a £200 rebate on energy bills for households from October, which will be paid back over next five years.
It has also offered a council tax rebate in England, and devolved governments such as Scotland will receive extra funding.
First minister Nicola Sturgeon said all money received will go towards supporting people in need.
Responding to the updates from Ofgem and Sunak, Carmichael said: “The news that the energy price cap will be hiked to the highest level ever in April is unwelcome to say the least.
“We have to question the value of a price cap that can leap by 54 per cent in one bound – if this is a measure to protect families from soaring energy costs then it does not feel all that protective.
“While the measures announced today may reduce the immediate harm to some extent the Chancellor appears to be gambling on the idea that energy costs will quickly drop again. If he is wrong then this ‘rebate and repay later’ strategy is only likely to extend the pain for families struggling with their energy bills.
“This ought to be the moment to reconsider the cuts to Universal Credit and the National Insurance tax hike which are compounding the squeeze on the worst-off.
“The Bank of England has just predicted inflation to rise to over seven per cent by the spring – if we are to mitigate what is turning into a cost-of-living tsunami then we need a bit more ambition to support struggling families now.”
Ofgem said the price cap is updated twice a year and tracks wholesale energy and other costs.
Chief executive Jonathan Brearley said: “We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure energy companies support their customers in any way they can.
“The energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event, and Ofgem’s role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas.
“Ofgem is working to stabilise the market and over the longer term to diversify our sources of energy which will help protect customers from similar price shocks in the future.”
Meanwhile, oil company Shell has cashed in on the rocketing oil and gas prices by reporting profits of £4.7 billion in the final quarter of last year alone.
Closer to home, local councillor Ryan Thomson said many families are facing a “real cliff edge situation”.
“We need to look at what we can do to help and address the cost of living for people,” he said.
“A hike in energy prices, a hike in National Insurance, a hike in fuel prices, inflation at record levels, and proposed increases to council house rent and council tax. This is not sustainable, affordable or acceptable.”
In December Citizens Advice Scotland published research showing that more than one in three people in in the country find energy bills unaffordable.
Anyone struggling with electricity bills can receive support the Shetland Citizens Advice Bureau.
It can be contacted on 01595 694696 or by email through its website.
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