The End Fuel Poverty Coalition has called on Ofgem to abandon plans for a quarterly price cap increase due in January 2023 and to make five urgent reforms to the energy market, in a letter to the regulator's chief executive, Jonathan Brearley1. The letter was copied to the Secretary of State for Business, Energy and Industrial Strategy and to the chair of the Commons BEIS Committee1.
The Coalition said a January increase would "penalise households in the depths of winter" and asked Ofgem to "abandon plans for a quarterly price cap and instead move to a three-times a year (at most) model"1. It said this would keep more flexibility in the cap while avoiding a January rise predicted by Cornwall Insight1. The group also asked for reform of the cap so that it does more for households on pre-payment meters and covers people off gas and on heat networks1.
"First, we would urge you to abandon plans for a quarterly price cap and instead move to a three-times a year (at most) model. This would ensure more flexibility in the cap, but also mitigate a devastating January price increase, as predicted by Cornwall Insight, in the middle of winter."
The five requests set out in the letter were1:
| Request | Detail |
|---|---|
| Drop the quarterly cap | Move to a cap reviewed three times a year at most |
| Reform the cap | More help for pre-payment meter customers; extend cover to off-gas homes and heat networks |
| Supplier support package | Similar in scope to pandemic-era support, enhanced, and extending to debt relief rather than deferral |
| Standing charges | "Urgent reform of the regressive and punitive standing charges regime"; charges "should be reduced" |
| Longer-term review | Consider a "super cap" price ceiling at current levels and a social tariff or "energy for all allowance" |
The Coalition also asked Ofgem to set out how it would ensure no one is disconnected this winter or "abandoned by their supplier"1. Ian Preston, director of household energy services at the Centre for Sustainable Energy, said short-term support measures were "only short-term sticking plasters" and that a longer-term home retrofit programme and more funding for energy advice were needed, adding that "CSE's energy advice line calls are at an all-time high"1. Jan Shortt, general secretary of the National Pensioners' Convention, said her organisation had written to Ofgem and the Chancellor calling for immediate and long-term measures "before the price cap rises again in October to a shocking average of £2,800 a year"1.
Why it matters for households
The price cap sets the maximum a supplier can charge per unit of gas and electricity for a typical household on a default tariff, so the timing of each change decides when higher or lower rates reach a home. A January increase would land in the coldest months, when consumption is highest, and the Coalition's argument is that a cap reviewed three times a year at most would avoid that1. For a household, the difference between a quarterly and a less frequent cap is not the annual level but when the cost arrives and how long a winter bill stays at the higher rate.
Standing charges are the fixed daily amount paid whatever the usage, and the Coalition describes the current regime as regressive and punitive, penalising the most vulnerable1. For homes that use little energy, standing charges make up a larger share of the bill, and for pre-payment meter customers the letter says the cap should do more to help1. The prepayment versus direct debit difference in what each payment method costs under the cap is a separate question from the level of the cap itself.
The longer-term proposals, a "super cap" ceiling at current levels and a social tariff or "energy for all allowance", would change how a home's energy independence is priced rather than only how much support it receives1. The letter does not set out how either would be funded or administered, and no costings are given1.
What happens next
The letter asks Ofgem to review the operation of the price cap with consumer groups and to set out market reforms, and requests a future meeting with the Coalition1. No date is given for a decision on the January 2023 cap or on the five requests1. The price cap history page records past levels and announcement dates; the wider bills and price cap material covers how the cap works.
Sources1 cited
- End Fuel Poverty Coalition calls for further Ofgem action - End Fuel Poverty Coalition, endfuelpoverty.org.uk