Price cap hike row as Big Six make huge prof­its yet mil­lions ‘suf­fer in the cold’

Daily Express - - Front Page - By Michael Knowles

MIL­LIONS of fam­i­lies face a “dev­as­tat­ing” en­ergy bill hike as critics last night warned the price cap is fu­elling debt and mis­ery.

En­ergy reg­u­la­tor Ofgem is this week ex­pected to au­tho­rise one of the big­gest price rises in a decade, driv­ing up bills for around 15 mil­lion house­holds by as much as £118 and above pre-cap lev­els.

Char­i­ties warned mil­lions will have “no choice but to suf­fer in cold and dan­ger­ous homes” while the Big Six en­ergy firms con­tinue to rake in huge prof­its.

It comes just days af­ter a cold snap saw Bri­tain grind to a halt, with snow fall­ing across much of the UK and tem­per­a­tures in many re­gions plum­met­ing to well be­low freez­ing.

Ruth Lon­don, from Fuel Poverty Ac­tion, said: “Yet an­other in­crease in en­ergy prices

will be dev­as­tat­ing for peo­ple strug­gling to keep warm. En­ergy com­pa­nies con­tinue to pri­ori­tise profit over peo­ple’s lives, now and for fu­ture gen­er­a­tions.

“The price cap was sup­posed to bring re­lief but it just keeps go­ing up, bring­ing in­creased debt and mis­ery.

“Be­tween 9,000-10,000 peo­ple die from cold homes in an av­er­age UK win­ter. Last year it was 16,000 partly due to the ex­treme weather in our chang­ing cli­mate.

“This also forces up food prices by dis­rupt­ing agri­cul­ture, so many peo­ple are hun­gry as well as cold.

“Oil and gas prices are ris­ing world­wide but the Gov­ern­ment has slashed sup­port for re­new­able en­ergy and in­su­la­tion.

“To save lives, now and in the fu­ture, both must be re­stored.”

Adam Scorer, chief ex­ec­u­tive of char­ity Na­tional En­ergy Ac­tion, said: “The re­cent freez­ing weather, cou­pled with the likely en­ergy com­pany re­sponses to the higher caps, will have a hugely dam­ag­ing im­pact on the most vul­ner­a­ble in our so­ci­ety.


“Whilst Ofgem’s caps are re­quired to re­flect the un­der­ly­ing costs of sup­ply­ing en­ergy, higher prices will in­evitably pile yet more pres­sure on the mil­lions who have no choice but to suf­fer in cold and dan­ger­ous homes.”

He added: “Last win­ter, cold homes con­trib­uted to record lev­els of ex­cess win­ter deaths and chronic ill health.

“We es­ti­mate more than 10,000 need­less deaths were due to vul­ner­a­ble peo­ple, of­ten strug­gling with ex­ist­ing ill­health, be­ing un­able to heat their homes ad­e­quately, if at all.

“Many oth­ers are adopt­ing un­safe cop­ing strate­gies which cre­ate huge pres­sures and need­less in­creased costs for our stretched health and so­cial care ser­vices.”

Na­tional En­ergy Ac­tion warned some peo­ple try to warm their homes us­ing ovens or can­dles while oth­ers close cur­tains or put news­pa­pers over win­dows to hold heat in.

On Thurs­day, Ofgem is ex­pected to al­low en­ergy com­pa­nies to in­crease prices from April – just months af­ter the cap forced sup­pli­ers to cut their tar­iffs by an av­er­age £76. When it came into force in Jan­uary the cap on de­fault tar­iffs was set at £1,137 per year for dual fuel bills. Ex­perts now ex­pect this to rise to around £1,240. The Gov­ern­ment or­dered Ofgem to ap­ply a price cap to all de­fault tar­iffs af­ter the Com­pe­ti­tion and Mar­kets Author­ity found ma­jor sup­pli­ers were able to over­charge mil­lions of peo­ple.

But Deepa Venkateswa­ran, of Bern­stein Re­search, pre­dicted most stan­dard tar­iffs will be more ex­pen­sive than be­fore the cap came in. Peter Tut­ton, head of pol­icy at Step-Change Debt Char­ity said: “In the first half of 2018, just un­der 15 per cent of our new clients were be­hind on ei­ther a gas or elec­tric­ity bill, a fig­ure which is even higher among our clients in vul­ner­a­ble sit­u­a­tions.

“Against a back­drop of ris­ing en­ergy prices, we wel­comed the en­ergy price cap as a step in the right di­rec­tion.

“How­ever if the price cap in­creases, ques­tions arise about its ef­fec­tive­ness. If firms are with­draw­ing their cheap­est op­tions, or rais­ing prices for those most at risk of fi­nan­cial dif­fi­culty, then wider ac­tion is likely to be needed.

“We would call on the gov­ern­ment and en­ergy firms to work to­gether to look at how they can help peo­ple meet the costs of en­ergy bills, par­tic­u­larly those who have ir­reg­u­lar or fluc­tu­at­ing in­comes.”

Alex Neill, Which? man­ag­ing direc­tor of Home Ser­vices, said: “This is go­ing to be a bit­ter blow for peo­ple who thought that the price cap would stop their bills from ris­ing. En­ergy cus­tomers now have

two months to switch and se­cure a bet­ter deal be­fore the new cap comes into ef­fect.

“While there are fewer cheap deals on the mar­ket than a year ago, by switch­ing to­day you could choose bet­ter cus­tomer ser­vice and po­ten­tially save more than a hun­dred-and-fifty pounds.”

Ofgem cal­cu­lates the cap us­ing a for­mula that in­cludes whole­sale gas prices, en­ergy sup­pli­ers’ net­work costs and costs of gov­ern­ment poli­cies, such as re­new­able power sub­si­dies.

The reg­u­la­tor’s direc­tor, Rob Sal­ter-Church, ad­mit­ted: “No one wants to see price rises and we recog­nise the in­crease we ex­pect to see is go­ing to be chal­leng­ing for some cus­tomers.

“But we can’t con­trol global whole­sale costs. “What we can do is en­sure that we have re­moved the op­por­tu­nity to in­crease prices by more than would be jus­ti­fied.”

It comes just weeks af­ter npower chief ex­ec­u­tive Paul Cof­fey blamed the price cap on fall­ing prof­its.

He said: “The re­tail en­ergy mar­ket is in­cred­i­bly tough.

“Ofgem fore­casts that five of the big six en­ergy com­pa­nies will make a loss or less than nor­mal prof­its this year ow­ing to the im­ple­men­ta­tion of the price cap.

“And with sev­eral re­cent fail­ures of new en­ergy sup­pli­ers, it is clear that many have been pric­ing at lev­els that are not sus­tain­able.”

Steven Day, co-founder of green en­ergy firm Pure Planet, said the cap should not be used as an ex­cuse to hike prices to match or fall just be­low it.

But SSE, one of the “Big Six”, said that whole­sale prices had climbed.

SSE En­ergy co-head Stephen Forbes said: “Faced with the op­tion of sell­ing en­ergy at a loss, break­ing even, or mak­ing a small profit mar­gin, any re­spon­si­ble and sus­tain­ably run busi­ness will choose to price ap­pro­pri­ately to re­cover costs.”

En­ergy UK, which rep­re­sents sup­pli­ers in the UK, said it was not will­ing to spec­u­late ahead of the an­nounce­ment on Thurs­day.

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