Ofgem’s change to price cap ‘cruel’ and detrimental to SMEs say campaigners

British energy regulator Ofgem announced yesterday it would now make quarterly changes to the price cap, instead of every six months, a move which has received much criticism.

Ofgem says the decision to adjust the price cap every three months will allow changes in gas and electricity prices to be reflected quicker and more accurately.

But numerous organisations have disapproved of this, with Age Scotland calling the move ‘cruel’, as bills could rise even further in January when they are already predicted to reach £4,210 a year.

Brian Sloan, chief executive at Age Scotland, said: ‘Customers could face another energy price hike on New Year’s Day and plunge hundreds of thousands of older people into poverty. To do this during the coldest time of the year and after a tough autumn of higher prices is a cruel move and will pose a significant health risk to many vulnerable older households across Scotland.

‘With the cost of energy and food already spiralling out of control and 1 in 3 older households in Scotland already living in fuel poverty, and many more just on the cusp, we’re urging Ofgem to rethink their decision and for governments to consider how those on the lowest incomes can be protected. We can’t afford to wait for the worst effects to be felt and the devastating impact this decision would have on older people.’

Alan Thomas, UK CEO at Simply Business, has also come out against Ofgem and pointed out that the decision could have a detrimental effect on small business (SME) owners who have already struggled through the pandemic.

He said: ‘SMEs have already lost an eye-watering total of £126.6bn as a result of the pandemic – equating to over £22,500 each – and the prospect of further financial challenges will be a blow.

‘We’ve already seen the impact of rising gas prices on larger firms – with the food and drink industry suffering in particular. Small businesses are also set to feel the consequences, and reduced levels of cash-flow and liquidity will only make things worse for many.

‘Why’s this important? The UK’s six million SMEs account for 99% of all businesses and contribute trillions of pounds to the UK economy. Put simply, the UK’s recovery depends on small businesses bouncing back.’

Jess Ralston, a Senior Analyst at the Energy and Climate Intelligence Unit (ECIU), also criticised the move by Ofgem and said the only way to address rising energy bills is to insulate homes and accelerate net zero policies and the transition to renewables.

Photo by Fré Sonneveld