Poverty charities and campaigners have slammed a decision by energy regulator Ofgem to introduce a quarterly price cap, calling the move “simply inhumane”.
Simon Francis, co-ordinator of the End Fuel Poverty Coalition warned that the decision could lead to unnecessary deaths this winter, and called for a “full programme of emergency financial support” from the government.
The energy price cap, which limits how much money energy suppliers can charge their customers, was previously adjusted every six months.
Following months of volatility in the energy market, Ofgem announced on Thursday that the price cap will from now on change every three months to reflect the cost of energy more accurately. This means energy costs will fluctuate more frequently for consumers.
Ofgem defended its decision by saying “the energy market moves far more quickly now so six months is too long and it’s not sustainable for people to pay a rate up to six months old,” adding that keeping the six month cap could lead to the collapse of suppliers.
Francis said the decision “has nothing to do with protecting consumers, but everything to do with protecting the profits of energy firms who have to ‘hedge’ buying of energy”.
The move comes as British Gas owner Centrica recorded a profit of £1.34bn during the first six months of the year, a five-fold increase on the same period in 2021.
Meanwhile millions of households are struggling to pay soaring energy bills, while The Big Issue revealed last week that thousands of people are being forced onto expensive prepayment meters after falling into debt with their energy companies.
The update to the price cap means that it will be adjusted in October and then again in January.
Recent forecasts suggest that the average annual energy bill could come close to £4,000 when the price cap is adjusted in January.
This news led to financial campaigner Martin Lewis warning that households will be forced to make “awful decisions” in the face of unmanageable costs.
Francis accused the government of failing to protect those facing poverty as a result of Ofgem’s decision.
“Ultimately, this decision will force more people into fuel poverty in the middle of winter, causing additional stress on the NHS and it may ultimately lead to increased levels of excess winter deaths this year. It is simply inhumane.
“It’s clear that the government and the Conservative Party leadership hopefuls just don’t get the scale of the problem facing the country, nor the public anger at rising bills. They are running out of time to act.
“Only a full programme of emergency financial support, a rapid expansion of energy efficiency programmes and a commitment to bringing more cheap renewable energy on stream will help people stay warm this winter and into the future,” he said.
Peter Smith, director of policy and advocacy at National Energy Action said Ofgem’s move “wasn’t necessary” and was likely to lead to “misery and increased anxiety” across millions of households.
Jess Ralston, senior analyst at the Energy and Climate Intelligence Unit also called on the government to act now to protect the most vulnerable.
“The most logical and quickest way to lower our bills is to accelerate net zero policies like insulating our leaky homes and building out more renewables so we are shielded from the interference of Putin’s actions.
“However, time is ticking for government to act before winter weather really starts to bite, as fuel poverty experts are clear that the current package won’t be enough to help those already at breaking point,” she said.