Energy regulator Ofgem has announced an 80% rise in the average household energy bills – potentially pushing millions further into fuel poverty.
The announcement came as people across country grapple with the cost of living crisis which have left many struggling to feed their families and heat their homes.
Now it has been confirmed it is to get worse as Ofgem says the price cap will rise from £1,971 to an eye-watering £3,549, when it comes into effect on October 1.
It represents an 80% hike in the average household’s energy bill.
1 OCT NEW ENERGY PRICE CAP
Direct Debit Rates.
Overall up 80%Elec:
Daily standing charge was 45.3p now 46.3p
Unit rate kWHwas 28.3p now 51.8pGas:
Daily standing charge was 27.2p now 28.4p
Unit rate per kWh was 7.4p now 14.8p(Ie you pay £273/yr before any energy use)
— Martin Lewis (@MartinSLewis) August 26, 2022
A typical household on a prepayment meter will see their bills rise from £2,017 to £3,608 from 1 October.
According to Ofgem, the price cap rise reflects the record prices in gas following the Russian invasion of Ukraine.
Chief executive of Ofgem, Jonathan Brearley says that the new prime minister will need to act fast to help people struggling with energy bills.
In a statement, he said: “With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this.”
‘Absolutely horrifying for people’
Paul Deliu, RGU’s Energy Transitition Institute director told BBC Radio Scotland the new price cap could add £35 billion to the cost of living crisis and expects over a million households in Scotland could be classed as “fuel poor”.
He also says that support to tackle the problem needs to be addressed as the current support is based on assumptions the price cap would only increase to £2,800.
He added: “We cannot announce a problem without a solution. It leaves people in a real place of anxiety and uncertainty.”
Obviously this is completely unaffordable.”
Ian Gregory, Caithness Poverty Action Group
Ian Gregory, who works for Caithness Poverty Action Group, also spoke to GMS and said: “Bills are going absolutely stratospheric. Roughly a three-fold increase in personal consumption.
“I have spoken to a lot of people recently, such as older people living in council accommodation, which are fitted with old-fashioned heaters.
“A pensioner living on under £200 a week, is now looking at a bill of over £100-plus just for heating, obviously this is completely unaffordable.”
Mr Gregory says his phone has yet to stop ringing as people call asking for advice or support with their energy bills.
He recalls one older person calling in tears saying that they cannot make their pension stretch any further and says people are “absolutely desperate”.Today’s announcement about energy prices will be really worrying for lots of people. The CAB network is here to help. Check advice online or find your local CAB at https://t.co/Y2GRATHgHe
We don’t judge. We just help. https://t.co/wFx0ZA5J2V
— Citizens Advice Scotland (@CitAdviceScot) August 26, 2022
While fuel poverty is termed as using 10% income on fuel, Mr Gregory believes in the areas he works that this may rise to 100% given the new price cap.
Child Poverty Action Group are warning that family households will be impacted hard by the rise with households spending 30% more on energy.
John Dickie, director of the CPAG, said “Today’s energy cap announcement will terrify many low-income families.
“Here in Scotland one immediate step would be to double the remaining Scottish child payment bridging payments so that hard up families with school aged children get equivalent support to those already benefitting from the £20 a week Scottish child payment.”
What is the reaction from your local officials?
Northern Isles MP, Alistair Carmichael says the new figure, that was predicted for days, is a “cataclysmic hit to family finances”.
While Moray MSP Richard Lochhead demanded immediate action from the UK Government in the short term.
He also suggested “urgent and fundamental reform of the energy market that is failing energy rich Moray and Scotland”.
This is simply unaffordable for millions. It cannot be allowed to go ahead. This rise must be cancelled, with the UK gov and energy companies then agreeing a package to fund the cost of a freeze over a longer period, coupled with fundamental reform of the energy market https://t.co/bDXM7fDeyD
— Nicola Sturgeon (@NicolaSturgeon) August 26, 2022
Rhoda Grant MSP believes the situation is worse for homes in the Highlands and Islands, given that many remain unconnected and rely on increasingly expensive fuels.
She said: “This price increase will have a bigger impact in the Highlands and Islands, in that we already pay unfair distribution costs.
“Added to that many homes in Highlands and Islands are not on the gas grid and are reliant on electricity, oil or LPG to heat their home.
“We hear of the huge profits that oil and gas companies are making yet people are going to be plunging themselves into debt just to get through the winter.”
‘A frightening truth’
Citizens Advice Scotland chief executive Derek Mitchell said: “This increase should not go ahead. It is absolutely horrifying for people who are hanging on by a thread financially.
“CABs are on the frontline of the cost of living crisis, and what they are seeing all across the country is that people literally cannot afford another big increase in bills.
“The frightening truth is that people face the very real prospect of freezing or starving this winter without help.
“We already see a link between the demand for energy advice and food insecurity advice, demand for both is rising – even before the weather turns cold.”
Colin Mathieson, spokesman for Advice Direct Scotland, said: “Our energyadvice.scot service provides free, practical advice on the support and assistance available, such as grants.
“Experts can also help with understanding energy bills and make referrals to sources of support for those struggling to pay.”
Ofgem says it is making any price cap projections for January as the market remains volatile, but it says the market for gas in winter means that prices could get significantly worse through 2023.
Responding to the announcement the Scottish Government said it has prepared a £1.2 million package to expand energy support services.
From Monday, August 29, the £2 million Social Housing Fuel Support Fund will open, providing tangible help to our most vulnerable households.
Energy Secretary Michael Matheson said: “Today’s price cap announcement and increase imposes a burden that customers simply cannot be expected to carry.
“The only acceptable course of action now is for the UK Government, who have the necessary policy levers and borrowing powers at their disposal, to take immediate steps to cancel the increase for all households.
“The Scottish Government is treating this situation as a public emergency.”
A UK Government spokesperson said: ““Direct support will continue to reach people’s pockets in the weeks and months ahead, targeted at those who need it most like low-incomes households, pensioners and those with disabilities.
“As part of our £37 billion package of help for households, one in four of all UK households will see £1,200 extra support, provided in instalments across the year, and everyone will receive a £400 discount on their energy bills over winter.”
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