New energy price cap rise is 'nothing short of a catastrophe', says Jamie Stone
The latest rise in the energy price cap was branded "nothing short of a catastrophe" by local MP Jamie Stone as he declared: "Our leaders have failed us."
Energy regulator Ofgem announced today that the price cap will rise to £3549 a year for dual fuel for an average household from the start of October, an increase of 80 per cent.
Ofgem blames the rise in global wholesale gas prices, "driven still higher to record levels by Russia slowly switching off gas supplies to Europe".
Mr Stone, the Liberal Democrat MP for Caithness, Sutherland and Easter Ross, said: “This energy price rise is nothing short of a catastrophe for thousands of households across the Highlands who are already struggling to make ends meet.
“The only option is for energy prices to be frozen before these rises wreak havoc on our communities. Then we need a proper plan to be put in place to bring bills down next year.
“As millions suffer, the Conservatives and the SNP do nothing – no policy or plans from the UK or Scottish governments. While Scots face one of the biggest crises in living memory, Boris Johnson is asleep at the wheel and Nicola Sturgeon has jetted off to Denmark.
"They have no idea how much pain these energy prices will cause people living in the Highlands, many of whom rely on electricity and heating oil, which cost even more than mains gas.
"Their failure to work together and protect people from these unfathomable price hikes is a dereliction of duty at the highest level. Our leaders have failed us."
The price cap puts a maximum per unit price on energy that reflects what it costs to buy energy on the wholesale market and supply it to people's homes. It also sets "a strict and modest profit rate that suppliers can make from domestic energy sales".
However, Ofgem says that, "unlike energy producers and extractors, most domestic suppliers are currently not making a profit".
It has warned that the market for gas in winter means prices "could get significantly worse through 2023".
Ofgem CEO Jonathan 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 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.”
Ofgem says it has strengthened the rules around direct debits to ensure suppliers set them at the right level, meaning that customers only pay exactly what they need to.
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-income 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 £1200 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.”
Immediate funding is being awarded by the Scottish Government to advice organisations to make sure energy customers can access support and guidance to help deal with rising costs.
More than £1.2 million will be distributed to help agencies including Advice Direct Scotland, Home Energy Scotland and Citizens Advice Scotland reach more people.
The funding will also support a training programme for staff from third-sector organisations to expand the reach of expert advice.
Scotland's minister for zero carbon buildings and tenants' rights, Patrick Harvie, said: “We know that this is an incredibly unsettling time for all households and businesses and it is imperative that those worried about or struggling with heating their homes access the information and support they need to reduce their energy bills.
“A further energy price cap increase announcement will only serve to escalate concerns, making the need for impartial, expert advice and support even more vital.
“The Scottish Government is clear that energy customers simply cannot be expected to carry the burden of further price rises in October, and that the UK government must now commit to freeze the cap for all households and to support energy companies to deliver that.
“In the meantime, the cost crisis is already hitting energy customers hard and the Scottish Government will continue to do everything within our means to support the people of Scotland through it.
“This funding will ensure that expert advisors across the country stand ready to provide crucial support and guidance to those understandably worried about their energy bills. I would urge everyone who has concerns to access these services and get the support they need.”