Comments on Ofgem price cap announcement & Chancellor’s “Rebate & Clawback” Scheme

Commenting on Ofgem’s recent announcement that the energy price cap will rise to £693 affecting 22 million households from April 1 2022, Dr Simon Cran-McGreehin, Head of Analysis at the Energy and Climate Intelligence Unit (ECIU) said: “The sky-high price of gas, partly thanks to Russian interference, is due to add at least £500 to the average energy bill in April, with a further £68 to deal with supplier collapses caused by the gas crisis.

“There’s been a £6 fall in levies which support insulation for vulnerable households and British renewables which are currently cushioning electricity bills from the steeper rise seen on gas bills. Both levelling-up and net zero mean wasting less energy and using less gas, and so insulating ourselves from future gas crises.”

Commenting on the Chancellor’s “Rebate and Clawback” scheme, Sepi Golzari-Munro, Deputy Director at the Energy and Climate Intelligence Unit (ECIU) said: “High global gas prices are expected for another few years at least. The Chancellor’s proposal, while giving some short-term relief, provides little more than a sticking plaster on the open wound left by the UK’s gas dependency.

“With many predicting high gas prices for years to come and the price cap rising again in October, the importance to vulnerable households of insulation schemes such as ECO, which is due for a boost in April, cannot be exaggerated. The question now is, will it be enough?”

Michael Grubb, Professor of Energy and Climate Change at University College London (UCL said: “The gas crisis is driven by international markets; domestic production is almost irrelevant to the prices in the UK. But around half the cost increase that consumers face is from the knock-on impact on electricity bills. That’s because at present, gas plants set the price for all even though they account for less than half our generation.

“Beyond the short-term sticking plaster, we need more renewables to reduce our dependence on gas, and reform the system so that consumers can engage more directly with low cost renewable energy generation. Consumers now are paying the price of the short-termism of the Treasury, particularly in blocking measures to improve household energy efficiency, and for the obstacles put in the way of onshore wind energy in particular.”

Paul Massara, Ex-CEO NPower said: “It is positive that the government are acting to help households with the increase in energy bills and I would especially welcome the increased funding to the Warm Home Discount, aimed at helping those most vulnerable.

“However even with this help, which in part will only see the increased deferred, we will still see bills going up by £500. The longer term solution for energy bills, climate change and the geopolitical risks from Russia, is greater investments in energy efficiency programs.”