Ofgem, the Office of Gas and Electricity Markets, have raised the new energy price cap by 6.4%. This is higher than expected, and means that most households will see rises of more than £100 per year. The BBC reported that:
The 6.4% increase means a household using a typical amount of gas and electricity will see their annual bill rise by £111 a year, or £9.25 a month, taking the total bill to £1,849 a year.
Ofgem review the price cap every three months. However, it is increasingly the case that they seem to function to just up energy prices every three months. In a statement, they said:
Rising global wholesale prices for energy are the main reason for the increase. Some people may see a reduction in their standing charges, but this will depend on the region in which they live.
However, that’s not the full picture. Nor is it the full story – as a promise Keir Starmer made before 2024’s general election is about to come back to haunt him.
Ofgem: ‘cruel’ energy price cap rise
Unite’s general secretary Sharon Graham said:
This is a cruel increase which is going to hit the elderly and low paid workers the hardest.
How can this be acceptable when energy companies are making billions in profits and millions of people are struggling to keep warm?
Citizens Advice also revealed that a staggering 6.7 million people in Britain in debt to their energy supplier. And, just to compound that:
Citizens Advice has found energy network companies, which provide pipes and cables to people’s homes, have pocketed nearly £4 billion in excess profits over the last four years.
They explained that over one in three people struggle to afford their energy bills. They concluded:
Our recent analysis found energy network companies made billions in excess profits while households have faced soaring bills, and it’s only right this money be used to help fund better targeted bill support and much-needed debt relief.
It’s a familiar story – people struggle with bills while energy companies make massive profits.
Who is Ofgem protecting?
On social media, people were asking the same question – what is the point of a regulator like Ofgem if they seem to let companies get away with massive profits at the cost of the consumer?
Accounting professor Prem Sikka said:
UK domestic energy prices to rise 6.4% in April to £1,849 a year on average.
Fuel poverty will increase. People will cut spending elsewhere, derail economic recovery.
UK energy industry made £483bn profit since 2020.
Govt/regulators don't protect peoplehttps://t.co/kqBR2xGHi0
— Prem Sikka (@premnsikka) February 25, 2025
Campaigner James Melville pointed out the double standards – otherwise known as lies – of Keir Starmer:
“Under a Labour government we would freeze energy bills. We wouldn’t allow them to go up.”
~ Keir Starmer
Snake oil salesmanship.
UK domestic energy prices are to rise by 6.4% in April to £1,849 a year on average. pic.twitter.com/zWQZPxNpnu
— James Melville 🚜 (@JamesMelville) February 25, 2025
Journalist Andrew Fisher showed just how much prices have gone up over the last year:
⏫10% hike in October
🔼1.2% rise in January
⏫6.4% hike in AprilSomeone really needs to explain the concept of a 'price cap' to Ofgem …
We're being ripped off with the acquiescence of an inept regulator. pic.twitter.com/7ynSXzcFhn
— Andrew Fisher (@FisherAndrew79) February 25, 2025
MP Richard Burgon was also suspicious as to the effectiveness of Ofgem:
The so-called energy regulator Ofgem says energy bills from April will rise by 6.4%
The Government must step in and impose a real price cap and tax energy profits more to provide extra help to people.
And to end this rip off, we must bring energy back into public ownership.
— Richard Burgon MP (@RichardBurgon) February 25, 2025
Campaign group Common Wealth took energy companies to task:
🚨NEW: Ofgem price cap raises by 6.4%, meaning customers will pay £111 more on average (per year) on energy bills.
Higher energy costs aren’t just due to rising gas prices. Companies are exploiting our dysfunctional energy system for profit.
Here’s how they do it. 🧵 pic.twitter.com/a8RUFpG0di
— Common Wealth (@Cmmonwealth) February 25, 2025
Energy price cap: a racket
In comparison to the rest of Europe, the UK is much worse off when it comes to energy prices. GreenMatch, an energy saving company, found that:
Households on the lowest incomes in the UK are disproportionately affected by cost of living increases, compared to those on high-incomes in the UK and compared with European average, based on projected figures taken in January 2021 and May 2022.
Why do households in the UK struggle so much? GreenMatch said:
Part of the reason for this is because the UK housing stock is among some of the most poorly insulated across Europe. Research has found that the average UK home will lose heat 5 times faster than buildings in Germany, and that the most poorly insulated homes will pay £1,000 more to heat in 2022.
Last year, the Institute of Health Equity and Friends of the Earth found that almost 10 million households were living in damp and poorly insulated buildings. They also found that:
These 9.6m households also have an income below the Joseph Rowntree Foundation’s minimum standard for a decent living, meaning it is unlikely they would be able to afford the costs of adding insulation to their homes.
So, this all means that households in the UK lose heat quicker than their European counterparts. People are then more likely to be unable to afford necessary repairs to fix the problem. On top of that, energy companies are swindling money out of bill payers for the sake of shareholder profits. And then, in comes Ofgem – with its third consecutive rise in the energy cap. And the real kicker? European households are paying less for their electricity.
It’s all well and good giving people money saving advice, and telling us to switch providers. But, none of this is going to change until the government intervenes to insulate houses better and Ofgem actually does its job of regulating corrupt energy companies. And, if they can’t do that then they’re not fit for purpose whatsoever.
Featured image via screengrab
