Energy regulator Ofgem has announced that new increased price cap levels on gas and electricity bills will come into effect in October.
Ofgem is the successor to the agencies which had to be put in place to protect consumers from profiteering price rises by the newly-formed energy companies when gas and electricity were privatised. The regulator gradually removed price controls in the early 2000s, taking the view that ‘the market’ was working well and could be trusted not to profiteer at the expense of its customers.
However, an investigation by the Competition and Markets Authority into trading practices and competitiveness led to the introduction of a tariff-cap in 2018 to protect the poorest and most vulnerable members of society, which has remained in place ever since.
Now, Ofgem is increasing the cap on tariffs which consumers have to pay for their energy due to increased wholesale energy prices these last six months, with gas prices hitting a record high due to a recovery in global demand and tighter supplies. This is increasing the cost of heating homes and pushing up electricity prices.
Around 15 million consumers benefit from the safety net which is the tariff-cap, protecting those on default tariffs by only allowing the energy companies to pass on legitimate costs. It’s estimated this saves consumers between £75 and £100 each year as a result – around £1billion in total.
My concern is that this increase comes at a time when many families are still facing uncertainty or struggling with the effects of the pandemic. Any constituent who is struggling with their fuel bill should check with their energy supplier as there are a range of assistance measures which can be accessed, or get in touch with my Constituency Office where I and my staff will be happy to advise on these options. If required, I will get in contact with your energy supplier directly. My team and I stand ready to help if you need us.
On a related subject, I noted recently that the provisional figures for 2020 show that over 97% of Scotland’s gross electricity consumption was from renewable sources. Last year was an all-time record for renewable energy generation in Scotland, the equivalent of powering all households in Scotland for three and a half years.
Scotland’s net exports of electricity in 2020 was its highest to date, a 21% increase compared to 2019 with an estimated wholesale market value of £0.76 billion.
When it comes to renewable energy, Scotland truly did win the ‘natural lottery’ and if we make the right choices we can provide the people of Scotland with energy security, and help our neighbours. Because Scotland has a wealth of natural resources in wind, wave and hydro power. And if we protect the rich natural environment that supplies us with these resources, this wealth will be around for ever, growing in value.
Our natural resources have already created thousands of new jobs. I want the people of Scotland to share in the wealth of natural resources we have on our doorstep. If we had the powers to regulate our own energy sector we could ensure that we maximise the economic potential of renewables — and we could also tackle fuel poverty at source.
So that no-one needs to worry about staying warm in winter.