‘Very worrying’: Welsh customers’ energy bills to average £3,549 from October, Ofgem confirms
Ofgem has confirmed an 80.06% rise in the energy price cap, sending the average household’s yearly bill from £1,971 to £3,549 from October.
The cap will come into effect for around 24 million households in Wales, England and Scotland on default energy tariffs on October 1, and will remain in place until December 31, when it will be adjusted again.
The 4.5 million pre-payment meter customers, who are often the most vulnerable and already in fuel poverty, will see an even more punishing increase, with their average annual bill set to go up to £3,608.
Ofgem’s chief executive Jonathan Brearley warned of the hardship energy prices will cause this winter and urged the incoming Prime Minister and new Cabinet “to provide an additional and urgent response to continued surging energy prices”.
The regulator said the increase reflected the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the Covid pandemic, and had been driven still higher to record levels by Russia slowly switching off gas supplies to Europe.
Mr Brearley said: “We know the massive impact this price cap increase will have on households across Britain and the difficult decisions consumers will now have to make. I talk to customers regularly and I know that today’s news will be very worrying for many.
“The price of energy has reached record levels driven by an aggressive economic act by the Russian state. They have slowly and deliberately turned off the gas supplies to Europe causing harm to our households, businesses and wider economy. Ofgem has no choice but to reflect these cost increases in the price cap.
“The [UK] Government support package is delivering help right now, but it’s clear the new Prime Minister will need to act further to tackle the impact of the price rises that are coming in October and next year.
“We are working with ministers, consumer groups and industry on a set of options for the incoming Prime Minister that will require urgent action. The response will need to match the scale of the crisis we have before us.
“With the right support in place and with regulator, Government, industry and consumers working together, we can find a way through this.”
Fuel poverty charities immediately called on the Government to urgently extend the household support package announced in May – when the price cap was predicted to reach around £2,800 in October – “to prevent the bleakest of winters”.
Adam Scorer, chief executive of fuel poverty charity National Energy Action, said: “The scale of harm caused by these price rises needs to sink in. A warm home this winter will be pipedream for millions as they are priced out of a decent and healthy quality of life.
“Households need money in their pockets to weather this storm or we are going to see millions in dangerously cold homes, suffering in misery with unimaginable debt and ill health.
“Action is needed now to prevent the bleakest of winters.”
Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said: “Today’s Ofgem price hike is like a dagger to the heart of millions of people up and down the country.
“As a result of the decision, parents will be unable to feed their children, the sick and elderly will be condemned to worsening health, disabled people will go without vital medical equipment and households will be forced into poverty for the first time in generations.
“All the solutions lie at the Westminster Government’s door, yet it is silent in the face of this looming disaster.”
Philippe Commaret, the managing director of energy giant EDF, has warned that half of UK households could be in fuel poverty in January as a result of rocketing prices, while Which? has urged the Government to raise its energy bills discount by at least 150% or risk pushing millions of people into financial distress.
The consumer watchdog said the Government’s financial support for all households must increase from the current £400 to £1,000 – or from £67 to £167 per month from October to March.
However, no immediate extra help will be announced by Boris Johnson’s Government, with major financial decisions being postponed until either Liz Truss or Rishi Sunak is in No 10 after the Tory leadership contest.
On Wednesday, Chancellor Nadhim Zahawi insisted “nothing is off the table” when it comes energy bills, but added that a freeze in the price cap would not deliver “targeted help” for those who need it most.
Based on Wednesday’s gas prices, experts at consultancy Auxilione think the cap will reach £5,210 in January 2023 and £6,823 in April.
Wales’ Minister for Social Justice Jane Hutt said that families in Wales were “facing the biggest fall in living standards since records began”.
“The projections for those who will be plunged into poverty are unforgiving and all the while we are faced with the unacceptable three-pronged chaos of a failing UK government, a cruel price cap increase and the record profits of oil and gas giants,” Jane Hutt said.
“While oil and gas giants bathe in record profits from shaking down customers and revelling in government support packages, the UK Government fails to even acknowledge an emergency budget is necessary.
“People across Wales need support now. We need an emergency budget, we need to freeze gas and electricity prices immediately and we need to tax the oil and gas giants making record profits.”
She added that since November 2021, the Welsh Government had used “all available financial” levers to deliver a number of support packages to support households across Wales deal with the crisis.
“We first announced our Household Support Fund which included, among other support, a £200 cash payment for families on low incomes to help with energy bills,” she said.
“Again, the Welsh Government stepped up to support families following Ofgem’s announcement at the beginning of the year to increase the domestic energy cap with an unprecedented £330million cost-of-living support package.
“This package of support delivered a £150 payment to households with their council tax, £25million for a discretionary fund aimed at supporting struggling households and £21million to extend free school meals during 2022.
“I’m proud that we are now able to provide a further £90million to run another Welsh Government Fuel Support Scheme in 2022-23, this scheme will launch on 26 September and we’ve extended the eligibility to support more households with vital support.
“We have delivered this package of support from our own budget, this is on top of the announcements from the UK Government, but Ofgem’s decision today, demonstrates the real need for further targeted support immediately, we know what we have provided is not enough.”
Reiterating the call to deliver a package of support for the most vulnerable, the Minister stated: “Welsh Government Ministers have consistently called on Westminster to take several measures that will help support people during this crisis.
“We’ve called for the introduction of a lower price cap for low-income households, we called for a significant increase in the rebate through schemes such as the Warm Homes Discount, to restore the £20 uplift in Universal credit and uprate benefit payments for 2022-23 to match inflation rather than using the September 2021 CPI figure of 3.1%.
“Our actions go some way to addressing the serious problems the most vulnerable in our society are facing, but unfortunately, these calls have fallen on deaf ears.
“The continued inaction by Westminster carries the real risk of consigning the people of the UK to a decade of poverty. This cannot be allowed to happen.”
‘Soon as possible’
A UK Government Spokesperson said: “We know people are incredibly worried about rising energy bills, following unprecedented gas prices across the continent driven by global events, including Putin’s aggression in Ukraine and his weaponisation of energy in Europe.
“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.
“The civil service is also making the appropriate preparations in order to ensure that any additional support or commitments on cost of living can be delivered as quickly as possible when the new Prime Minister is in place.”
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So money is spent on electricity. Less luxury items bought and so we have a recession. Discuss