The government has announced support measures to help ease the effect of a huge 54% increase in energy bills, after Ofgem raised the price cap by £693 to £1,971 from April. Prepayment customers will see their cap rise from£1,309 to £2,017. A further increase of £400 is expected when the next cap is set in six months’ time.

The government responded with plans for a £200 discount on bills, but that will not take effect until October and it takes the form of a loan that will be recouped in £40 increments over five years. In addition, there will be a £150 rebate on countil tax for homes in bands A to D.

Ian Preston, director of household energy at the Centre for Sustainable Energy (CSE), said: “We need to literally insulate people from the impact of future energy price increases! If we insulate our homes and buildings well, they’ll become more energy-efficient – there’s a range of measures available for different budgets and we can support people with finding grants.”
He said there are actions Ofgem can take:
• It could require energy suppliers to proactively contact customers who are self-disconnecting from their energy supply. Energy suppliers know how much their customers are spending and immediate information for those on smart meters. This should alert them to vulnerable households where less energy than expected is being used, who should be approached directly and either offered support, or referred to agencies like CSE for specialist help.
• It could also publish all the commitments suppliers have made – for example, what they are doing about customers who self-disconnect. This would allow them to be held accountable for their promises.

Mike Foster, chief executive of the Energy and Utilities Alliance, said: “It would be churlish to ignore the government’s response, any help is better than none. But using council tax to rebate bill increases seems a very blunt instrument, which fails to take into account actual household incomes but does reflect 1991 house values. I fear the distribution of this rebate will not be fair and many winners will not be the low paid.

“The proposed loan to energy companies to keep bills £200 lower now, but to be paid back later, is a stunt designed to appear to help. It is a heat now, pay later scheme that simply delays the pain not reduce it. But the fundamental root cause of the problem has not been addressed in today’s announcement. How does the UK shift away from global fossil fuel prices?“

Dan McGrail, Chief Executive, RenewableUK said: “Figures published today by Ofgem show that green levies are falling, so anyone attempting to blame renewables and net zero is seriously misinformed. Let’s be clear – this is a crisis caused by the soaring cost of gas.

“In the last three months of 2021, wind and solar power was so cheap that they actually paid back nearly £160 million to consumers, reducing energy bills. The escape route from volatile and uncontrollable gas prices couldn’t be clearer – investing in our green future secures low-cost reliable power as well as getting the UK to net zero as fast as possible”.
Sue Ferns, Senior Deputy General Secretary of Prospect, said: “People will welcome anything that helps them with rocketing bills but this still does nothing to fix our broken energy market nor does it go far enough to help the poorest households. There is also a huge risk that these measures simply entrench higher bills for years to come. The energy market is fundamentally broken. It’s time to invest in new nuclear and renewables, take energy retail out of private hands and find a sustainable solution that works for consumers.”

Dr Nina Skorupska CBE, Chief Executive of the Association for Renewable Energy and Clean Technology, said: “These policies alone will not cover the expected energy bill increases and don’t address a fundamental reality – as long as households are at the mercy of volatile fossil fuel prices, we will continue to see people struggle to pay the bills.

“That is why the government must address the scale of the problem by providing catalysts to improve the insulation of homes and to drive up the installation of domestic renewables and clean technology.

“If the government does not accelerate the energy transition, the cost of living crisis will get more severe, and harder and more expensive to fix.”