Ofgem’s Energy Price Cap

by David Hilferty, Director of Impact at Citizens Advice Scotland.

The latest Ofgem energy price cap came into force at the start of this month. That’s not good news though: as we struggle through this bleakest of winters and coldest of months, our gas and electricity bills are going to be more expensive than they were before.

Because the very term ‘energy cap’ is of course a misnomer. When is a cap not a cap? When it fails to protect people from soaring costs and in any case is adjusted – and more often than not upwards – every three months. When the price cap was first introduced in January 2019, the average UK energy bill was £1,137. Today it is £1,758.  

Supposedly intended to help people who were struggling with unaffordable bills, the energy price cap is little more than a sticking plaster on an energy market that needs major surgery. Yet again this winter people across Scotland are shivering in the dark because they cannot afford this essential service that all of us need.

The CAB network sees the devastating impact of fuel poverty everyday – energy is one of our fastest growing areas of advice post-pandemic. Debt is a primary driver of that increase in demand – the average energy debt presented by people we support is over £2,500.

But we know that the scope and scale of this crisis extends well beyond the people supported by our network in local communities all across Scotland. So we recently asked YouGov to investigate the impact of fuel poverty in Scotland as a whole. The results are nothing short of shameful.

YouGov surveyed 1,064 people, one third of whom said their biggest financial concern this winter is their energy bills. Nearly eight in ten people said they’ve cut back on spending over the past year because of these concerns. For many, that means pulling on extra layers or wrapping up in blankets rather than turning on the heating, while around a third of people said that they sometimes sit in the dark because they cannot afford to keep the lights on.

And all of this impacts our mental wellbeing. More than a third of people say soaring energy costs are stopping them from enjoying life. Nearly one in five report losing sleep over it, while more than a quarter say the pressure has taken a toll on their mental health.

This is inexcusable. And yet why is it just accepted? Why are decision-makers unwilling to take the sort of bold action that will address this crisis? The energy cap doesn’t work, and Ofgem’s recent attempts to ‘reset’ energy debt doesn’t go anywhere near far enough to help struggling households.

We and others have set out the actions that will make a difference. What is needed is a comprehensive root-and-branch reform of our broken energy market. The UK Government should introduce a social tariff on energy bills, targeted at lower income households and a proper, robust scheme to reduce or cancel energy debt.

These solutions are known and available. Failing to implement them is a choice.

So let 2026 be the year we take the action necessary to tackle fuel poverty. Anything less will amount to the continued toleration of harm.

This article was first published in the Herald.