Price cap rise: the industry responds

Jess Ralston, Senior Analyst, ECIU:
“The government doesn’t have a serious plan for dealing with the gas crisis and without one, as the IFS has pointed out, the £15 billion bills bailout for this winter may have to grow and be repeated next winter. The elephant in the room is the cost of gas and unless households are helped to use less by conserving heat with insulation, bills will remain high.
“The ECO insulation scheme has knocked £600 a year off the bills of millions of households even before this latest hike, but funding for it remains low. Shifting policy costs on to general taxation will provide only a little relief and more UK gas won’t drop the price as we’re part of an international market.”

Martin McTague, chair, Federation of Small Businesses:
“Small businesses are left out in the cold when it comes to energy bills, with the vast majority excluded from the household energy price cap and other protections designed for domestic household consumers. Unlike large corporates, small firms cannot hedge costs and negotiate deals with their large energy suppliers. Many of our members say the eye-watering energy bills could be the final nail in the coffin as they struggle to get through winter.

“We don’t have the luxury to wait until the winter, and inaction from our new Prime Minister could spell the end for many businesses. Plans for urgent intervention must be finalised and ready to go on Day 1, for whoever wins the leadership contest on 5 September”.

Mark Sommerfeld, Head of Power and Flexibility, Association for Renewable Energy and Clean Technology:
“This devastating hike in the energy price cap will come as a hammer blow for many households, and leaves real uncertainty for businesses that are weighing up the economic impact over the coming months.
“It is clear that significant intervention is needed, with the expansion of support through the Energy Bills Support Scheme, one such example. A high-level expert panel must also be urgently convened to consider further options around the energy crisis.
“However, Government must not lose sight of the medium and long-term solutions to this crisis either. While up front support is imperative, so too is the necessity of delivering renewable generation, now by far the cheapest form of power generation, accompanied by making homes and buildings more energy efficient.
“The Government must also offer sustained focus on the current government review of the electricity market arrangements, which has the longer-term potential to provide market reforms that will ensure consumers can benefit from low cost and secure renewable generation, helping to stabilise the energy market and lower bills for years to come.
“We can ill-afford any more lost time – the Government must come forward with a comprehensive plan, fast.”

Dan McGrail, Chief Executive, RenewableUK:
“Let’s be absolutely clear – the cause of this unaffordable increase in household bills is the cost of gas. So we urgently need to see a greater level of emergency support for consumers from the Government to get through the winter, and we need to switch to low-cost alternatives much faster.
“The latest round of renewable energy projects show that wind is the cheapest source of new power for the UK, generating home-grown electricity which is many times cheaper than the eye-watering cost of fossil fuels on the international market. So we need to get on with building bigger British clean energy projects faster to help ease the pain for consumers”.

Ian Barker, Managing Director, BFY Group:
“We need to swiftly agree a centralised suite of measures that will help customers through the winter, and work together to put in place a long-term market structure that provides the UK with greater energy security and price stability for customers.

“These are unprecedented times, in many ways worse than the Covid pandemic, as the whole of the UK will suffer from higher and more volatile energy prices over what is forecast to be a number of years – unless dramatic change is made. A suite of measures to reduce energy bills is needed now to protect UK customers and slow down the rate of inflation. The UK has some tough decisions to make, and they need to be taken soon to avoid a winter tsunami of unprecedented social and economic hardship.”

Dr Gemma Berwick, Senior Consultant, BFY Group: “We cannot have a market where renewables which should be sold for ‘normal prices’ are being sold at super-normal prices; the July 2022 CfD auction for wind and solar was £40-45/MWh, yet yesterday gas prices resulted in renewables being sold on the forward market for Winter 22 at £700/Mwh.”

“This is like a pint of beer which should be getting sold for £4-£5 but instead it’s being sold for £70 a pint. We should all accept that something needs to change. Investment in renewable generation in the UK must continue at a pace to provide for greater energy independence and security and help us to reach Net Zero.”

Alan Thomas, UK CEO, Simply Business:
“The latest energy price cap increase is a fresh blow to the thousands of small business owners already at breaking point. SMEs are feeling the crippling pressure of rising costs, energy and fuel prices, alongside their ongoing recovery from the economic impact of the pandemic.

“…As the energy price cap does not apply to businesses, suppliers are allowed to increase their out-of-contract rates by as much as they choose in order to cover their own costs. The surging cost of fuel and energy, alongside the overall rising cost of living, will also understandably see households cut back on non-essential spending. There is a domino effect in place. This impact on consumer purchasing behaviour will trickle through to the books of small business owners at a time when SMEs need our support the most. The reduced levels of cash-flow and liquidity will only make things worse for many.”

Sarah Merrick founder and chief executive, Ripple Energy:
“It’s clear that customers’ concerns in the absence of bolder Government action are leading them to look for their own solutions to cripplingly high prices. We’ve seen reports of rooftop solar inquiries and insulations surge and now we are seeing the same on co-operative wind ownership. We’ve seen reservations to own a bit of our next wind farm jump 170% over the last 2 months. At the same time, high energy prices are making the payback period on customer owned generation fall. If Cornwall Insights predictions ring true, the predicted payback period for wind ownership on an average 3 bed house could tumble from 14 years to less than half of that. Members of our first project who are currently benefiting from high savings may even see payback periods of less than 4 years.”

Simon Oscroft, Co-Founder, So Energy:
“Even though we’ve known for some time roughly what October’s price cap level would be, today’s announcement confirming the level at £3,549 is a sobering body blow for customers. Putin’s war is driving these price rises, and this requires a wartime response from the government.
That is why we are calling on the government to double this winter’s Energy Bill Support Scheme to £800 and to quadruple the Warm Homes Discount for the most vulnerable to £600. This is the simplest, most targeted and crucially the quickest way to get support directly to customers before this price hike takes effect.
“The latest price projections into 2023 make for even worse reading, showing bills could increase to over £6,000 next year. This will require further Government intervention, such as the proposed Tariff Deficit Scheme which we support.”

A government spokesperson:
“We know people are incredibly worried about rising energy bills, following unprecedented gas prices across the continent driven by global events, including Putin’s aggression in Ukraine and his weaponisation of energy in Europe.

“Direct support will continue to reach people’s pockets in the weeks and months ahead, targeted at those who need it most like low-incomes households, pensioners and those with disabilities. As part of our £37 billion package of help for households, one in four of all UK households will see £1,200 extra support, provided in instalments across the year, and everyone will receive a £400 discount on their energy bills over winter.

“The civil service is also making the appropriate preparations in order to ensure that any additional support or commitments on cost of living can be delivered as quickly as possible when the new Prime Minister is in place.”

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