Energy industry responds to new energy price cap

The industry has welcomed the fall in the energy price cap, however, it highlighted that energy bills will still be nearly double what they were just 18 months ago

Earlier today, Ofgem, the energy regulator, unveiled the new energy price cap for the upcoming period.

This announcement has sparked curiosity about the industry’s perspective on this development and its potential implications.

Energy UK’s Deputy Chief Executive, Dhara Vyas, has responded to Ofgem’s morning price cap announcement, highlighting both the positive and ongoing challenges for customers.

Vyas said: “If – as the current projections indicate – annual bills of £2,000+ become the new normal, it underlines the importance and urgency of the energy industry, Ofgem, government and consumer groups working together to put in place targeted support for those most in need next winter.

“We also need to press ahead with expanding our own sources of domestic, clean power and making more of our homes energy efficient as these will help bring down energy costs permanently for all customers.”

In response to Ofgem’s recent price cap announcement, Citizens Advice Chief Executive Dame Clare Moriarty acknowledged that the decrease in the price cap offers some relief for households.

However, Moriarty added: “Energy bills will still be nearly double what they were just 18 months ago. That’s unaffordable for millions of households.

“For many, life is getting worse, not better. Year on year we’re breaking records for the number of people struggling with energy debt.

“It’s clear more government support will be needed in the future for struggling households.”

Mike Thornton, Chief Executive Officer at Energy Saving Trust, called for a clear plan from the government to achieve the 15% energy demand reduction target by 2030 and drive systemic changes for reduced bills, carbon cuts, and enhanced energy security.

Martin Lewis, the Founder of MoneySavingExpert and a prominent advocate for consumer rights, has provided insights into the implications of Ofgem’s price cap announcement.

He highlighted that starting from 1st July, energy bills will no longer be subsidised by the government. Lewis said: “Ofgem is thankfully dropping the price cap below the government’s Energy Price Guarantee for the first time since it was introduced.

“Bills will drop by an average 17%, meaning for every £100/mth people pay today, they will typically be paying £83/mth from July.

“This will be a relief for many, yet most will still be paying more for their energy than during the winter. This is because, apart from for those with high use, the drop in the rates doesn’t make up for the £66 per month state support people got until April – and most are on monthly direct debit, which means they pay the same in summer as winter.

“Overall, this still leaves people paying double or more what they did before the energy crisis hit in October 2021.”

National Energy Action’s Chief Executive Adam Scorer said:  “Coming out of winter, most people will welcome any respite from record high prices, but it still leaves prices more than two-thirds higher than the start of the energy crisis and two million more households trapped in fuel poverty.

“More than two and half million low income and vulnerable households are no longer receiving any government support for unaffordable bills. For them, the energy crisis is far from over.”

Greenpeace UK‘s climate campaigner, Georgia Whitaker, has responded to Ofgem’s latest price cap announcement, cautioning against excessive excitement over the headlines.

Whitaker explained: “Thanks to the government’s failure to properly invest in insulating homes or switching to cheap, low carbon heating – even with this fall in the price of energy – we’re all still paying 100% more to heat our homes now than we were three years ago.

“Last winter should have been a wakeup call for the government to deliver the nationwide insulation programme and wholesale switch to cheap, renewable powered heat pumps that we desperately need. This is a common sense way to lower bills for good, reduce our emissions and level up communities across the UK.”

Sam Richards, Founder and Campaign Director of the pro-growth campaign group Britain Remade, responded to the latest update on the Ofgem energy price cap. Richards expressed appreciation for the decrease in the energy price cap; however, he emphasised that numerous households across the country are still grappling with exorbitant energy bills.

Simon Francis, Co ordinator of the End Fuel Poverty Coalition, expressed concerns regarding the impact of the energy price cap announcement.

Francis said: “After months of inflation and the wider cost of living crisis, people are even less able to afford these high energy bills.

“The government needs to use the summer to fix Britain’s broken energy system because for millions of people the energy bills crisis is far from over.

“This means ramping up energy efficiency programmes, helping the public with energy debt and reforming energy pricing arrangements so people don’t suffer again this winter.”

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