Tag: energy costs

‘Decisive action’ to break influence of gas on electricity prices

Families across the country will be better protected from energy crises, as government moves to break link between gas and electricity prices

  • Families across the country will be better protected from energy crises, as government moves to break link between gas and electricity prices
  • New plans include long‑term fixed‑price contracts for renewables, protecting families when gas prices spike
  • Immediate action to tax excess profits through the Electricity Generator Levy by raising the rate from 45% to 55%, ensuring an increased proportion of the extraordinary revenue generated when the gas price spikes is available to government to support businesses and households with the cost-of-living
  • Comes as government doubles down on drive for clean, homegrown power with raft of measures to unlock public land, speed up planning and cut bills for families

Plans to better protect families and businesses by ending the unfair way international gas prices push up electricity prices across Great Britain take a major step forward today.

Instability in the Middle East has shown that Britain’s reliance on international fossil fuel markets leaves families and businesses exposed to volatile gas prices, driving the cost-of-living crisis even though much of the country’s electricity comes from cheaper renewables and nuclear. 

When wars, geopolitical tensions or supply shocks abroad push up global gas prices, electricity bills rise with them, exposing families to crises they have no control over. 

Over time, this problem is easing as new clean energy projects are built on fixed price contracts that protect consumers from gas price volatility. But a significant share of renewable generation – about 30% of Britain’s power supply – is still exposed to wholesale prices set by gas, leaving families vulnerable when international prices rise.

Therefore, to shield families from future crises, today the government is setting out new measures to ‘break the link’, reducing the impact that volatile gas prices have on the price of electricity. This will be done by:

  • Voluntary long term fixed contracts: offered to existing low-carbon generators not on fixed‑price contracts – covering around a third of Britain’s power supply. This will help protect families and businesses from higher bills when gas prices spike, with contracts offered only where they deliver clear value for money for consumers
  • An updated Electricity Generators Levy: immediate action to tax excess profits through the Electricity Generator Levy by raising the rate from 45% to 55%, ensuring an increased proportion of the extraordinary revenues generated when the gas price spikes is available to government to support businesses and households with the impacts of the conflict in the Middle East on the cost of living

Measures announced today will further reduce the share of electricity exposed to gas price shocks and provide generators the economic incentive to move on to fixed contracts not linked to volatile gas. The government is monitoring the impact of the current crisis on energy bills and will be ready to step in to provide targeted support where necessary.

Britain has already moved from gas setting the price of electricity around 90% of the time in the early 2020s, to around 60% today. Through the government’s clean energy mission, it is estimated gas will set the wholesale price around half of the time by 2030.

Prime Minister Keir Starmer said: “We need to get off the fossil fuel rollercoaster – this will make energy bills more stable and take the pressure off family budgets.

“When global gas prices spike, people here shouldn’t be picking up the tab.

“Our focus is simple: easing pressure on household budgets now, while building a homegrown energy system that protects families from global instability in the years ahead.”

Energy Secretary Ed Miliband said: “As we face the second fossil fuel shock in less than 5 years, the lesson for our country is clear: The era of fossil fuel security is over, and the era of clean energy security must come of age.

“That’s why we’re doubling down on clean power, to give our country energy security and bring down bills for good.”

Chancellor Rachel Reeves said: “Hardworking British families and businesses should not bear the brunt of global gas price shocks while electricity generators are making exceptional profits.

“Alongside moving generators onto the competitive pricing assured through wholesale Contracts for Difference, increasing the EGL to 55% will help to break the link between high gas prices and high electricity prices – offering households and businesses stronger protection against future energy shocks.”

Further measures

Speaking today at the Good Growth Foundation, the Energy Secretary set out further measures to help cut bills for families and deliver more clean, homegrown power:

Bigger grants for households on heating oil and LPG

The crisis in the Middle East has impacted those on heating oil and LPG the hardest. The government is today announcing an increase to the Boiler Upgrade Scheme (BUS) grant for properties heated by oil and LPG, taking the total grant to £9,000. This will help those households and small businesses in England and Wales most impacted by rising energy prices, particularly in rural areas, to electrify their heating and provide greater certainty over energy bills.

Further details on Transitional Energy Certificates 

Today in advance of legislation, we are publishing further details on Transitional Energy Certificates to provide greater certainty and clarity for industry looking to invest in already-explored areas near existing licensed fields, supporting a fair and managed transition.

Faster upgrades for social housing 

The government is already investing £1.2 billion to upgrade 100,000 social homes over the next 2 years. To accelerate further, the government is today providing an additional £100 million of funding for the Social Housing Fund, subject to final approvals, to support the delivery of up to a total of 57,000 solar installations for households this financial year. Through the Social Housing Fund and social housing regulations in the ‘Warm Homes Plan’, this will help households cut bills by hundreds of pounds and support up to a million homes reach EPC C.

Solar panels for schools and colleges 

Building on the success of Great British Energy’s solar scheme, the government is backing the company to extend support for more rooftop solar installations on a further 100 schools and colleges this year.  Up to £40 million of government investment, subject to final approvals, Great British Energy will deliver new rooftop solar and renewable schemes – helping the public sector cut energy costs and reinvest savings. 

Public land 

Driving forward plans to massively expand renewables across the Public Estate – including using brownfield land, industrial sites and railway sites to host solar panels and wind turbines. This could unlock up to 10 GW of capacity, even using only a fraction of government land, powering the equivalent of around 5 million homes.

Planning and land rules

Streamlining outdated rules to unblock the grid and speed up clean, homegrown power, through the biggest overhaul of planning, land access and grid connection processes since the start of the government’s clean energy mission — cutting delays for essential grid upgrades and renewables, and exploring new routes for developers to build and connect their projects faster. 

EVs, heat pumps and solar 

Plans to make it easier for people to switch to cheaper electric transport and heating, by making EV chargers, solar panels and heat pumps easier to install for renters, flat-dwellers and households without a driveway.  

The government is exploring ways to ensure that low-income households can benefit from plug-in solar through our ‘Warm Homes Plan’ this year, and have earmarked up to £25 million with a view to piloting support for plug-in panels in partnership with local authorities and mayors: our vision is a street by street approach where tens of thousands of low-cost solar panels are delivered to those most in need.

Reformed National Pricing

Households and businesses will benefit from a cheaper, more efficient energy system through a new Reformed National Pricing Delivery Plan. The delivery plan shows how smarter planning and faster delivery of electricity infrastructure could unlock up to £20 billion in benefits between 2030 and 2050.

deafPLUS partners with SGN to keep Deaf communities safe and warm

Please Click Here for the BSL format

National charity deafPLUS has launched an initiative to tackle fuel poverty in the Deaf community in partnership with energy network SGN.

energyPLUS will deliver tailored, accessible services in British Sign Language (BSL) and provide resources to help Deaf households stay safe, warm and informed.

Rising energy costs and a shortage of accessible support means Deaf households are at greater risk of unsafe or unaffordable living conditions. deafPLUS’s survey found 64% of BSL users in south east England have difficulty accessing qualified interpreters for essential services.

Without tailored help, too many Deaf people are left behind.

The partnership will support Deaf communities across SGN’s Scotland and southern networks and aims to:

· Deliver one-to-one personalised energy safeguarding advice via deafPLUS’s BSL Adviceline, video calls, and face-to-face sessions in community hubs.

· Distribute accessible carbon monoxide (CO) alarms with strobe lights and vibrating pads to households most at risk.

· Provide Deaf awareness training for SGN customer-facing teams.

· Support vulnerable households to sign up for the Priority Services Register.

· Refer households for home energy assessments and income maximisation services.

· Reach 20,000 people through a social media campaign on energy safety, CO awareness, and efficiency.

Running until March 2026, direct support will be provided to 1,250 vulnerable households, helping them to reduce fuel poverty and energy debt, improve energy efficiency and protect themselves from the risks of CO.

Funded by SGN, they’ll also have access to trusted financial and wellbeing support, gaining confidence to manage their energy needs.

Deaf communities across SGN’s Southern network will be supported including those in Berkshire, Dorset, East Sussex, Hampshire and the Isle of Wight, Kent, London, Oxfordshire, Surrey, West Sussex, and Wiltshire, as well as their network in Scotland.

Reg Cobb, Chief Executive Officer at deafPLUS, said: “No Deaf person should be left behind when it comes to energy safety and affordability.

“This partnership will breakdown barriers that have excluded Deaf people from essential energy advice and safety information. Together with SGN, we can ensure Deaf households are supported to stay safe, warm, and informed.”

Janet Duggan, Community Partnership Manager at SGN, said: “Working with quality trusted partners like deafPLUS ensures we can reach communities who need our help the most.

“We’re proud to support the delivery of accessible, life-changing energy advice and safety resources for Deaf people.

“Working with deafPLUS means we can deliver life-changing energy advice and resources to communities who need them most.”

See the launch for yourself here 

Electricity bills to be slashed for over 7,000 businesses in major industry shake-up

POWERING BRITAIN’S FUTURE

Industrial Strategy sets out a ten-year plan to boost investment, create good skilled jobs and make Britain the best place to do business

  • Electricity costs for thousands of businesses to be slashed by up to 25%.
  • New Industrial Strategy to unlock billions in investment and support 1.1 million new well-paid jobs over the next decade.
  • Strategy developed in partnership with business, marking a new era of collaboration between government and high growth industries.
  • Strategy will make the UK the best country to invest in and grow a business, delivering on the Plan for Change.

More than 7,000 British businesses are set to see their electricity bills slashed by up to 25% from 2027, as the Government unveils its bold new Industrial Strategy today [Monday 23 June].

The modern Industrial Strategy sets out a ten-year plan to boost investment, create good skilled jobs and make Britain the best place to do business by tackling two of the biggest barriers facing UK industry – high electricity prices and long waits for grid connections.

British manufacturers currently pay some of the highest electricity prices in the developed world while businesses looking to expand or modernise have faced delays when it comes to connecting to the grid.

For too long these challenges have held back growth and made it harder for British firms to compete. Today’s announcement marks a decisive shift — with government stepping in to support industry and unlock the UK’s economic potential.

From 2027, the new British Industrial Competitiveness Scheme will reduce electricity costs by up to £40 per megawatt hour for over 7,000 electricity-intensive businesses in manufacturing sectors like automotive, aerospace and chemicals.

These firms, which support over 300,000 skilled jobs, will be exempt from paying levies such as the Renewables Obligation, Feed-in Tariffs and the Capacity Market — helping level the playing field and make them more internationally competitive. Eligibility and further details on the exemptions will be determined following consultation, which will be launched shortly.

The government is also increasing support for the most energy-intensive firms — like steel, chemicals, and glass — by covering more of the electricity network charges they normally have to pay through the British Industry Supercharger. These businesses currently get a 60% discount on those charges, but from 2026, that will increase to 90%. This means their electricity bills will go down, helping them stay competitive, protect jobs, and invest in the future.

This will help around 500 eligible businesses in sectors such as steel, ceramics and glass reduce their costs and protect jobs in industries that are the backbone of our economy and will be delivered at no additional cost to the taxpayer.

These reforms complement the government’s long-term mission for clean power, which is the only way to bring down bills for good by ending the UK’s dependency on volatile fossil fuel markets.

To ensure businesses can grow and hire without delay, the government will also deliver a new Connections Accelerator Service to streamline grid access for major investment projects — including prioritising those that create high-quality jobs and deliver significant economic benefits.

The government will work closely with the energy sector, local authorities, Welsh and Scottish Governments, trade unions, and industry to design this service, which we expect to begin operating at the end of 2025. New powers in the Planning and Infrastructure Bill, currently before parliament, could also allow the Government to reserve grid capacity for strategically important projects, cutting waiting times and unlocking growth in key sectors.

The Industrial Strategy is a 10-year plan to promote business investment and growth and make it quicker, easier and cheaper to do business in the UK, giving businesses the confidence to invest and create 1.1 million good, well-paid jobs in thriving industries – delivering on this government’s Plan for Change.

Prime Minister Keir Starmer said: “This Industrial Strategy marks a turning point for Britain’s economy and a clear break from the short-termism and sticking plasters of the past.

“In an era of global economic instability, it delivers the long term certainty and direction British businesses need to invest, innovate and create good jobs that put more money in people’s pockets as part of the plan for change.

“This is how we power Britain’s future – by backing the sectors where we lead, removing the barriers that hold us back, and setting out a clear path to build a stronger economy that works for working people. Our message is clear – Britain is back and open for business.”

Chancellor of the Exchequer Rachel Reeves said: ” The UK has some of the most innovative businesses in the world and our Plan for Change has provided them with the stability they need to grow and for more to be created.

“Today’s Industrial Strategy builds on that progress with a ten-year plan to slash barriers to investment. It’ll see billions of pounds for investment and cutting-edge tech, ease energy costs, and upskill the nation. It will ensure the industries that make Britain great can thrive. It will boost our economy and create jobs that put more money in people’s pockets.”

Business and Trade Secretary Jonathan Reynolds said: “We’ve said from day one Britain is back in business under this government, and the £100 billion of investment we’ve secured in the past year shows our Plan for Change is already delivering for working people.

“Our Modern Industrial Strategy will ensure the UK is the best country to invest and do business, delivering economic growth that puts more money in people’s pockets and pays for our NHS, schools and military.

“Not only does this Strategy prioritise investment to attract billions for new business sites, cutting-edge research, and better transport links, it will also make our industrial electricity prices more competitive.

“Tackling energy costs and fixing skills has been the single biggest ask of us from businesses and the greatest challenge they’ve faced – this government has listened, and now we’re taking the bold action needed. Government and business working hand in hand to make working people better of is what this Government promised and what we will deliver.”

Energy Secretary Ed Miliband said: “For too long high electricity costs have held back British businesses, as a result of our reliance on gas sold on volatile international markets.

“As part of our modern industrial strategy we’re unlocking the potential of British industry by slashing industrial electricity prices in key sectors.

“We’re also doubling down on our clean power strengths with increased investment in growth industries from offshore wind to nuclear. This will deliver on our clean power mission and Plan for Change to bring down bills for households and businesses for good.”

The Supercharger and British Industrial Competitiveness Scheme will be funded through reforms to the energy system. The government is reducing costs within the system to free up funding without raising household bills or taxes and intends to also use additional funds from the strengthening of UK carbon pricing, including as a result of linking with the EU carbon market.

We have set out an intention to link emissions trading systems, as part of our new agreement with the European Union to support British businesses. Without an agreement to do this, British industry would have to pay the EU’s carbon tax.

We intend to link our carbon pricing system with the EU’s, we will ensure that money stays in the UK—which allows us to support British companies and British jobs through these schemes.

Building on the Spending Review and the recently announced 10-Year Infrastructure Strategy, the Industrial Strategy is the latest step forward in our plans to deliver national renewal. It will include targeted support for the areas of the country and economy that have the greatest potential to grow, while introducing reforms that will make it easier for all businesses to get ahead.

The Strategy’s bold plan of action includes:

  • Slash electricity costs by up to 25% from 2027 for electricity-intensive manufacturers in our growth sectors and foundational industries in their supply chain, bringing costs more closely in line with other major economies in Europe.
  • Unlocking billions in finance for innovative business, especially for SMEs by increasing British Business Bank financial capacity to £25.6 billion, crowding in tens of billions of pounds more in private capital. The includes an additional £4bn for Industrial Strategy Sectors, crowding in billions more in private capital. By investing largely through venture funds, the BBB will back the UK’s most high-growth potential companies.
  • Upskilling the nation with an extra £1.2 billion each year for skills by 2028-29, and delivering more opportunities to learn and earn in our high-growth sectors including new short courses in relevant skills funded by the Growth and Skills Levy and skills packages targeted at defence digital and engineering.
  • Reducing regulatory burdens by cutting the administrative costs of regulation for business by 25% and reduce the number of regulators. 
  • Supporting 5,500 more SMEs to adopt new technology through the Made Smarter programme while centralising government support in one place through the Business Growth Service.
  • Boosting R&D spending to £22.6bn per year by 2029-30 to drive innovation across the IS-8, with more than £2bn for AI over the Spending Review, and £2.8bn for advanced manufacturing over the next ten years. This will leverage in billions more from private investors. Regulatory changes will further clear the path for fast-growing industries and innovative products such as biotechnology, AI, and autonomous vehicles.
  • Attracting elite global talent to our key sectors, via visa and migration reforms and the new Global Talent Taskforce.
  • Deepening economic and industrial collaboration with our partners, building on our Industrial Strategy Partnership with Japan and recent deals with the US, India, and the EU.
  • Reducing planning timelines and cutting costs for developers, by hiring more planners, streamlining pre-application requirements and combining environmental obligations, removing burdens on businesses as well as accelerating house building. 
  • Revolutionising public procurement and reducing barriers for new entrants and SMEs to bolster domestic competitiveness.
  • Supporting the UK’s city regions and clusters by increasing the supply of investible sites through a new £600m Strategic Sites Accelerator, enhanced regional support from the Office for Investment, National Wealth Fund, and British Business Bank, and more.

The plan focuses on 8 sectors where the UK is already strong and there’s potential for faster growth: Advanced Manufacturing, Clean Energy Industries, Creative Industries, Defence, Digital and Technologies, Financial Services, Life Sciences, and Professional and Business Services. Each growth sector has a bespoke 10-year plan that will attract investment, enable growth and create high-quality, well-paid jobs.

Dame Clare Barclay DBE, Chair of the Industrial Strategy Advisory Council and President of Enterprise & Industry EMEA at Microsoft said: “I welcome today’s Industrial Strategy, which sets out a clear plan to back the UK’s growth driving sectors.

” It is particularly positive to see the strong focus on skills in areas such as engineering, technology and defence. Commitments such as £187 million for the TechFirst programme will ensure the UK has the skills it needs to support our growth industries and seize transformative opportunities like AI.”

Rain Newton-Smith, Chief Executive, CBI said: “Today’s Industrial Strategy announcement is a significant leap forward in the partnership between government and business that sets us on the path to our shared goal of raising living standards across the country.  

“It sends an unambiguous, positive signal about the nation’s global calling card as well as the direction of travel for the wider economy for the next decade and beyond.

“The CBI has long been advocating for a comprehensive industrial strategy, based on the UK’s USP – the sectors and markets where we can compete to win on the global stage.

“More competitive energy prices, fast-tracked planning decisions and backing innovation will provide a bedrock for growth. But the global race to attract investment will require a laser-like and unwavering focus on the UK’s overall competitiveness. 

“Today marks the beginning of delivering this strategy in close partnership, at pace, and with a shared purpose.”

Stephen Phipson CBE, CEO at Make UK said: “British industry has been in desperate need for a government who understands our sector and had the strategic vision for a plan for growth.

“Today’s Industrial Strategy is a giant and much needed step forward taken by the Secretary of State who has seen the potential and provided the keys to help unlock it.

“Make UK has led the campaign for a new industrial strategy for many years, highlighting the three major challenges that were diminishing our competitiveness, hampering growth and frustrating productivity gains: a skills crisis, crippling energy costs and, an inability to access capital for new British innovators.

“The strategy announced today sets out plans to address all three of these structural failings. Clearly there is much to do as we move towards implementation but, this will send a message across the Country and around the world that Britain is back in business.”

Tufan Erginbilgic, Rolls-Royce CEO, said: “The UK Government’s Industrial Strategy commitment to support our world-leading aerospace and nuclear industries shows long-term strategic foresight.

“Rolls-Royce’s highly differentiated technologies in gas turbines and nuclear capabilities- including SMRs and AMRs- are uniquely placed to deliver economic growth, skilled jobs and attract investment into the UK.”

Mike Hawes OBE, SMMT Chief Executive said: “The publication of an Industrial Strategy – one with automotive at its heart – is the policy framework the sector has long-sought and Government has now addressed.

“Such a strategy – long-term, aligned to a trade strategy and supported by all of Government – is the basis on which the UK automotive sector can regain its global competitiveness.

“Making the UK the best place to invest now depends on implementation, and implementation at pace, because investment decisions are being made now against a backdrop of fierce competition and geopolitical uncertainty.

“The number one priority must be addressing the UK’s high cost of energy, enabling the sector to invest in the technologies, the products and the people that will give the UK its competitive edge.”

Five sector plans have been published today:

  • Advanced Manufacturing – Backing our Advanced Manufacturing sector with up to £4.3 billion in funding, including up to £2.8 billion in R&D over the next five years, with the aim of anchoring supply chains in the UK – from increasing vehicle production to 1.35 million, to leading the next generation of technologies for zero emission flight.
  • Clean Energy Industries – Doubling investment in Clean Energy Industries by 2035, with Great British Energy helping to build the clean power revolution in Britain with a further £700 million in clean energy supply chains, taking the total funding for the Great British Energy Supply Chain fund to £1 billion.
  • Creative Industries – Maximizing the value of our Creative Industries through a £380 million boost for film and TV, video games, advertising and marketing, music and visual and performing arts will improve access to finance for scale-ups and increase R&D, skills and exports.
  • Digital and Technologies – Making the UK the European leader for creating and scaling Digital and Technology businesses, with more than £2 billion to drive the AI Action Plan, including a new Sovereign AI Programme, £187 million for training one million young people in tech skills and targeting R&D investment at frontier technologies such as cyber security in Northern Ireland, semiconductors in Wales and quantum technologies in Scotland. 
  • Professional and Business Services – Ensuring our Professional and Business Services becomes the world’s most trusted adviser to global industry, revolutionising the sector across the world through adoption of UK-grown AI and working to secure mutual recognition of professional qualifications agreements overseas.  

Worried this winter? Let’s chat.

If you are worried about heating bills and the cost of living this winter, the Citizens Advice network is here to help.

Continued high living costs and months of unaffordable energy bills means many of us are worried about managing payments again this winter. Sadly, too many of us are switching off the heating, turning to credit to cover essential livings costs, or feeling like there is no solution to unmanageable bills.

But the Citizens Advice network in Scotland is here for you with free, impartial and confidential advice.

Find your local CAB

Your first port of call should be contacting your local Citizens Advice Bureau to get free, confidential and impartial advice. One of our specialist advisers will be able to talk to you face-to-face, go through your situation and work out the next steps. They will be able to help communicate with your energy supplier, set up a manageable repayment plan or find out if you are eligible for any grants or discounts.

Get help online

Specialist services

  • If you are thinking about claiming Universal Credit for the first time, we can help. Our Help to Claim advisers are available by webchat or telephone (0800 023 2581, Monday to Friday, 8am-6pm) and can guide you through the process, whether you’re looking for answers to quick questions or step-by-step support to make your claim.
  • The Money Talk Team at your local Citizens Advice Bureau helps you maximise your income, look at options to reduce costs and offers specialist debt advice. To find out more, start a webchat here.
  • If you are elderly, have certain health conditions, are pregnant or have young children, you may be eligible for additional support from your supplier. Check if you are eligible for the Priority Services Register here.
  • You can also call Home Energy Scotland on 0808 808 2282 for help with your home energy this winter.

More energy misery as Ofgem announces 10% price cap hike


23 August 2024 – OFGEM STATEMENT

Every 3 months we review and set a level for how much an energy supplier can charge for each unit of energy and daily standing charge, under the price cap. 

From 1 October to 31 December the price for energy for a typical household who use electricity and gas and pay by Direct Debit will go up to £149 per year. This is an increase of 10% and adds around £12 per month to an average bill.

The new cap is 6% (£117) cheaper compared to the same period last year (£1,834).

You are covered by the energy price cap if you pay for your electricity and gas by either: 

  • standard credit (payment made when you get your electricity and gas bill) 
  • Direct Debit
  • prepayment meter
  • Economy 7 (E7) meter

The actual amount you pay will depend on how much energy your household uses, where you live and the type of meter you have.  

Energy price cap rates 1 October to 31 December

Electricity rates

If you are on a standard variable tariff (default tariff) and pay for your electricity by Direct Debit, you will pay on average 24.50 pence per kilowatt hour (kWh). The daily standing charge is 60.99 pence per day. This is based on the average across England, Scotland and Wales and includes VAT.

Gas rates

If you are on a standard variable tariff (default tariff) and pay for your gas by Direct Debit, you will pay on average 6.24 pence per kilowatt hour (kWh). The daily standard charge is 31.66 pence per day. This is based on the average across England, Scotland and Wales and includes VAT.

Costs included in the energy price cap

The level of the energy price cap is made up of different costs, for example the wholesale cost of gas and electricity, costs to supply energy on the network and VAT. These costs are split within the energy price cap between the unit rate and the standing charge.

Read about typical household energy use and how the energy price cap is calculated on our Average gas and electricity use explained page. 

View and compare 1 October to 31 December and 1 July to 30 September energy price cap standing charges and unit rates by region. 

You can also get and compare all the energy price cap (default tariff) levels. 

Review of standing charges

Last year we started a review of standing charges. Our call for input had feedback from more than 30,000 customers, consumer groups, charities and others.

Today we have published an options paper on our ways to reduce standing charges for households, called ‘domestic standing charges’. Standing charges are set by your energy supplier and are also included in the energy price cap. Your supplier will charge you this cost each day, even if you do not use any energy on that day. The charge covers the cost to maintain the energy supply network, take meter readings, and support government social and environmental schemes, like the Warm Home Discount scheme. 

View Understand your electricity and gas bill

The options in the paper could reduce the standing charge by between £20 and £100 per year by transferring parts of these fixed supplier costs to the unit rate (the price paid for every unit of energy used). 

We know that if these changes are made it could affect people who cannot safely reduce the amount of energy they use. This could be because of their dependence on life-saving medical equipment or living in a low standard of housing with poor insulation.

We are asking energy suppliers to offer energy tariffs that have no or low standing charges as well as their current tariffs. This will mean that energy efficient households will be able to choose a tariff that rewards them for using less energy. It will also mean that other energy customers can also choose from more tariffs that meet their needs.

You could pay less for your energy by changing your energy tariff. Find out if you can change your tariff and how to switch energy supplier.  

The options paper also sets out long-term considerations relating to the assignment of network costs, as a part of a broader review of how electricity and gas system costs are recovered from users.  

We would like to hear your views on standing charges. The discussion closes on 20 September 2024. Read our standing charges options paper and feedback your views using our online form.

Support for people with a prepayment meter

We have also extended our initial 12-month allowance to cover increased debt costs associated with additional support credit which we expect to be in place for at least another 6 months.   Additional support credit is often issued to people at risk of being cut off from their energy supply because they cannot afford to top up their meter. This decision means that the most vulnerable consumers will continue to be supported and have an energy supply this winter.

Next energy price cap review

We review and set a level on how much an energy supplier can charge for each unit of energy including the standing charge every 3 months. The levels for the period 1 January to 31 March 2025 will be published by 25 November 2024. 

Caroline Abrahams, Charity Director at Age UK said: “Means-testing Winter Fuel Payment (WFP)  when fuel prices are rising by 10% spells disaster for pensioners on low and modest incomes or living in vulnerable circumstances due to ill health.

“It means an estimated 2 million older people in all, will face an even steeper mountain to climb in paying their energy bills and staying warm and well when the weather chills. With pensioners also losing the cost-of-living payments they’ve received over the last two years we simply cannot see how some of them will cope.

“This latest bad news about the Energy Price Cap rising quite significantly makes it even more obvious that means testing WFP with virtually no notice & with no protections to safeguard vulnerable groups was the wrong policy choice and one that is potentially hazardous for some older people.”

“There’s scarcely any time to tackle the long-term under-claiming of Pension Credit – for more than a decade a third of pensioners who are entitled to it have consistently missed out. And the million or so older people whose small incomes take them just above the line to claim are horribly exposed – no take-up campaign can help them.” 

“Means-testing WFP in these circumstances this winter is reckless and wrong. The Government must think again.”

Age UK urges any older person living on a low income or struggling with their bills to contact Age UK’s free Advice line on 0800 169 65 65 without delay to check they’re receiving all the financial support available to them.

Alternatively, people can visit www.ageuk.org.uk/money or contact their local Age UK for further information and advice.

National Energy Action has responded: Just now, @Ofgem announced that #EnergyBills will rise 9% from October. NEA Chief Executive @adam_scorer says, ‘There is still time for @Ofgem and UK government to act for those at greatest risk, but without support.’

New programme launches to help Scottish businesses cut costs and protect the planet

Environmentally conscious SMEs are being offered the chance to reduce their carbon footprint and lower energy bills thanks to a new partnership between Royal Bank of Scotland, the Edinburgh Climate Change Institute (ECCI) and the University of Edinburgh.

The free course allows businesses to identify the simple, cost-effective steps they can take to reduce emissions and save on outgoings while also helping the planet at the same time. 

Successful applicants will take part in three 2-hour workshops that begin by helping SMEs to understand their own energy and carbon usage data and how they can build their own tailored ‘Carbon Reduction Plan’.  

The free workshops also explain how taking positive environmental action can result in lower energy usage and therefore lower bills. Organisations can become more cost efficient by making positive changes such as changing boiler settings, installing smart lighting systems, swapping to sustainable suppliers and upgrading insulation. 

The scheme is currently accepting applications from all sectors, having already supported over 60 participants from industries such as manufacturing, charity and education.  

Applications for the next cohort close on 3rd October, with a later session set to launch at the start of November also welcoming candidates.  

Code Hostels completed the course earlier this year and has used the learnings from the programme to make sustainable improvements across the business, including buying more produce from local suppliers and switching to eco-friendly cleaning products. 

Talking of his experience, Jamie Greig, Operations and Design Consultant at Code Hostels, said: “The programme was a game changer for us. As a business, when you start looking at reducing emissions it can seem like an incredibly daunting process, and net zero targets can seem a long way off.  

“We found it really valuable to chat to the other groups on the cohort, and we quickly realised we weren’t alone in the challenges we were facing. 

“Sustainability in the hospitality industry is a personal passion of mine and we know that many other SMEs across the hospitality sector are experiencing the same challenges as we had at Code. I now run my own separate business, Our Property Bear, using energy monitors to help hotels and hostels monitor and reduce their energy consumption.” 

Judith Cruickshank, Chair, One Bank Scotland said: “Royal Bank of Scotland is delighted to work with the University of Edinburgh’s Edinburgh Climate Change Institute to deliver a programme which can make a real difference to SMEs across all sectors. 

“It offers the insight, learnings and access to experts to help businesses see the opportunities it can offer them – and see the potential tackling climate change could make.”  

Prof Dave Raey, Executive Director of ECCI, University of Edinburgh said: “The Climate Springboard programme is inspiring. The great engagement and responses from participating businesses is a testament to the fantastic work of the team here at Edinburgh Climate Change Institute and our partners at the Royal Bank of Scotland.  

“In simultaneously helping to cut energy costs and carbon emissions for such a wide array of businesses, they are delivering exactly the kinds of cost-effective climate action so desperately needed in every sector.” 

The scheme is currently accepting applications from all sectors, having already supported over 60 participants from industries such as manufacturing, charity and education.  

Applications for the next cohort close on 3rd October, with a later session set to launch at the start of November also welcoming candidates.  

SMEs looking to learn more about their emissions and how they can start reducing them are invited to register their interest here. More information about the programme is available here.  

Ofgem: Further reduction but ‘winter will be tough’

‘MANY FAMILIES WILL STILL STRUGGLE’

Energy regulator Ofgem has today (Friday, 25 August, 2023) announced a further reduction in the energy price cap for the last quarter of 2023 (Oct to Dec).     

The change will bring the average dual-fuel energy bill below £2,000 a year for the first time since April 2022, saving households an average of £151 on the previous quarter.   

From 1 October – 31 December, the cap will be set at an annual level of £1,923 for a dual fuel household paying by direct debit based on the current typical domestic consumption values (TDCV) rate. 

 Direct Debit Prepayment Standard Credit Economy 7 (electricity only Direct Debit) 
July – Sept 2023 cap £2,074 £2,077 £2,211 £1,400 
Oct – Dec 2023 cap £1,923 £1,949 £2,052 £1,298 

The drop, the lowest level since October 2021, reflects further falls in wholesale energy prices, as the market stabilises and suppliers return to a healthier financial position after four years of loss making.   

Ofgem is clear that it expects all suppliers to continue improving customer service, to support their most vulnerable customers and to shore up their financial resilience to prevent the kind of failures we saw two years ago. Ofgem recognises that there is some excellent best practice across the sector but expects this to be the norm with poor practice stamped out. 

Alongside changes to the price cap, Ofgem has also introduced measures to reduce costs for prepayment meter customers and ensure extra support for those facing disconnection from the network.   

The price cap savings – which can be passed on more quickly to customers thanks to the price cap updating quarterly – continues the downward trend since prices peaked at £4,279. However, it remains well above the average before the energy crisis took hold in 2021 and the market remains volatile.   

Jonathan Brearley, Ofgem CEO, said: “It is welcome news that the price cap continues to fall, however, we know people are struggling with the wider cost of living challenges and I can’t offer any certainty that things will ease this winter. 

“That’s why we’ve introduced new measures to support consumers including reducing costs for those on pre-payment meters, and introducing a PPM code of conduct that all suppliers need to meet before they restart installation of any mandatory PPMs.   

“There are signs that the financial outlook for suppliers is stabilising and reasonable profits are returning. With the small additional allowance we’ve made to Earnings Before Interest and Tax (EBIT), this means there should be no excuses for suppliers not to be doing all they can to support their customers this winter, and to reinforce this we’ll be introducing a consumer code of conduct which we will look to have in place by winter.

“This code will ensure there are clear expectations of supplier behaviours especially for their most vulnerable consumers with whom suppliers should be reaching out proactively, with compassion and understanding. There are great examples of suppliers already doing this but I want to see this become the norm in such an essential sector that has such a big impact on people’s lives.” 

Ofgem understands that while suppliers cannot control wholesale prices or fix the wider cost of living pressures hitting their customers, now the market has stabilised, they must continue improving customer service and ensure that support across the board is accessible, responsive and understanding, including giving time to make pay arrangements and directing customers to further support and advice. They must also invest in strengthening their financial resilience to protect consumers against the cost of supplier failure. 

Additionally, while still low by pre-crisis levels, we are starting to see more and more competitive fixed deals coming onto the market and levels of switching are slowly increasing.

With a lower price cap and reasonable profits starting to return, there is an opportunity for this to continue to grow. Anyone considering fixing should weigh up all the facts and consider what is most important to them, whether that’s the lowest price, or the certainty of knowing exactly what they will pay each month.

It’s important customers are comparing fixed deals with the new, lower price cap announced today. Suppliers are expected to ensure they are transparent in releasing all tariff information to enable consumers to make simple comparisons of the deals available to them across the market.  

While the price cap has protected households from the full extent of volatility and surges in wholesale prices over the last two years, it was originally introduced by the Government to protect the minority of consumers who did not switch rather than to cover the vast majority of consumers, as it does now.

It is a blunt tool and in the current market it has costs and as well as benefit. It’s important to look at alternative models to examine whether they could work better with the current volatile market and the move to net zero. 

 Ofgem has also today published:    

  1. A Final Decision to raise the Earnings Before Interest and Tax (EBIT) allowance by £10 per customer per year. Most of this increase is to cover Renewable Obligations ringfencing so that customers’ money is protected in the event of a supplier failure. 
  2. Removal of the temporary RO ringfencing allowance, worth £8 per customer and covered by the additional EBIT costs above  
  3. A new sliding scale for EBIT meaning if prices surge, the EBIT allowance reduces as a percentage preventing suppliers from making excessive cash gains from a high price market  
  4. Final decision on the allowance for additional support credit (ASC) bad debt costs – a new allowance to help ensure some of the most vulnerable consumers remain on supply this winter  
  5. Implementation of UNC840 in the cap, reducing the PPM premium  
  6. Price Cap model technical changes Final Decision  
  7. Levelisation Policy Consultation  

By raising the EBIT allowance, Ofgem is taking the next step in its drive to make the retail energy sector more resilient, as we move into another difficult winter when price volatility remains a risk.  

At the height of the energy crisis around 30 suppliers failed because they did not have enough capital in the reserve to stay in business – and the cost was shared among all energy consumers, adding £83 to bills.  

With suppliers only now starting to recoup a portion of their multi-billion pound losses over the past four years, a small increase in permitted profit margins will allow companies to better cover their costs, attract investment and retain financial stability protecting consumers into the future.  

Raising the EBIT allowance from its current rate of 1.9% to 2.4% from 1 October will involve an average £10 increase in bills per year. £8 of this will cover costs to consumers incurred by an additional requirement of suppliers to ringfence enough funds to cover their Renewable Obligations, protecting consumers from additional costs should a supplier go bust.    

The EBIT rate, which is well within international norms for energy retail profits and lower than most other business sectors in Britain, will also be altered from a ‘flat rate’ to a more flexible model that tracks the price cap level and tapers as low as 1.75% in the event of another price surge in the wholesale market. This would prevent suppliers from making excessive cash profits in a high-cost market. 

Strengthening the commitment to supporting struggling and vulnerable consumers, Ofgem is also reducing the cap for prepayment meter (PPM) customers by £51 per year through an updated approach to calculating the costs of unidentified gas, approved in April this year.  

Using some of the benefit from this change, the regulator is now able to introduce an initial 12-month allowance to cover increased debt costs associated with Additional Support Credit that is offered to PPM customers, often at the point of disconnection. This new allowance will help ensure some of the most vulnerable consumers remain on supply this winter.   

Longer term, Ofgem seeks to permanently end the PPM premium, where prepayment customers are charged more than those who pay by direct debit to cover the additional costs and resources required by suppliers to provide energy via PPM. A consultation is underway with an aim to ‘levelise’ these standing charges by April 2024 to coincide with the end of government support currently in place via the Energy Price Guarantee.  

Morgan Vine, Head of Policy and Influencing at Independent Age said: “Today’s Price Cap announcement offers little comfort to older people living on a low income and struggling to get by.

“Our helpline is continuing to hear from people in later life in financial hardship who have been forced to make sacrifices to pay their bills, including eating one meal a day, washing themselves in freezing cold water, and risking falls by not turning on the lights at night.  

“Gas unit costs are still well over double what they were in winter 2020/21 and electricity unit costs are up by over half. The fixed incomes of older people in financial hardship simply cannot keep up with these increases. Long term solutions to protect the most financially vulnerable from high energy prices are desperately needed. 

“We’re calling on the government to introduce an energy bills social tariff for those in greatest needed, including people over 65 on a low income and those who have high energy consumption due to illness.

“This long term and sustainable solution would offer some protection to people in later life living on low incomes, so they aren’t forced to make dangerous choices now, and as we approach the winter. “

The next quarterly price cap announcement will be in November 2023, covering January – March 2024.   

UNITE: Time to pull the plug on energy profiteers

New union investigation reveals taking energy into public ownership would end the ‘scandal of energy company profiteering’
  • Last year bill payers could have saved £45 billion with average bills cut by £1800. 
  • Unite General Secretary Sharon Graham to urge Starmer to reconsider Labour policy.  

Taking public control of the UK’s energy network could reduce bills, reduce inflation, and pay for itself in a few years, reveals new research by Unite the Union.

 Unite Investigates “Renationalising Energy – costs and savings considers how a publicly run energy network could use the massive profits of Britain’s energy giants to reduce household bills and fund the transition to a green future with secure jobs.

Unite Investigates’ report  is the first to determine the potential costs and savings of taking public control of the entire UK energy network – including North Sea oil and gas production, electricity generation, transmission and distribution networks, and supply companies.

The report reveals that companies made £45 billion profit from the UK domestic energy system in 2022. If that money had been kept in public hands, it could have been used to save each household £1,800 on their energy bills. Read Unite general secretary, Sharon Graham’s interview in today’s FT.

Household energy bills have been one of the biggest contributors to high inflation. Using energy profits to freeze bills in summer 2021, when prices started to shoot up, would have meant inflation was at least 4.1% lower last year. So in due course nationalisation could markedly reduce inflation.

Unite’s report also investigates the potential costs of nationalisation. Using the ‘book value’ approach, which compensates companies for their spending, Unite estimates a total cost of £90 billion. That is equal to just two years of profits at the 2022 level. Even as energy prices fall, taking control of energy would pay for itself within a few years.

Sharon Graham, Unite General Secretary said: “It’s time to end the scandal of our energy system which allows profiteers to pocket billions while workers and communities are left in the cold.”

“For the first time we have laid out the full costs and savings of taking the entire energy network we all rely on into public ownership.

“It’s a tragic missed opportunity that, if the energy system had been run for the benefit of all not the profits of a few, households could have saved £45 billion, avoiding high bills that have left millions in the cold or searching for ‘warm banks.’

“It’s time to pull the plug on the energy profiteers. Unite is showing it’s no longer a question of ‘can we afford to’, it’s how long can we afford not to.”

This report follows the historic profits recorded by BP and Shell, who made a combined profit of £55 billion and British Gas owner Centrica.

Unite has previously exposed rampant profiteering by electricity and gas distributors, who made £6.3 billion in 2021 with huge long-term operating profit margins of over 40 per cent.

UK government unveils new “Energy Bills Discount Scheme” for businesses, charities, and the public sector

  • Scheme will provide a discount on high energy costs to give businesses certainty while limiting taxpayers’ exposure to volatile energy markets
  • Businesses in sectors with particularly high levels of energy use and trade intensity will receive a higher level of support.

A new energy scheme for businesses, charities, and the public sector was confirmed yesterday (9th January), ahead of the current scheme ending in March. The new scheme will mean all eligible UK businesses and other non-domestic energy users will receive a discount on high energy bills until 31 March 2024.

This will help businesses locked into contracts signed before recent substantial falls in the wholesale price manage their costs and provide others with reassurance against the risk of prices rising again.

The government provided an unprecedented package of support for non-domestic users through this winter, worth £18 billion per the figures certified by the OBR at the Autumn Statement. This is equivalent to the cost of an increase of around three pence on people’s income tax.

The government has been clear that such levels of this support, unprecedented in its nature and huge scale, were time-limited and intended as a bridge to allow businesses to adapt. The latest data shows wholesale gas prices have now fallen to levels just before Putin’s invasion of Ukraine and have almost halved since the current scheme was announced.

The new scheme therefore strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion. This provides long term certainty for businesses and reflects how the scale of the challenge has changed since September last year.

The Chancellor of the Exchequer, Jeremy Hunt, said: “My top priority is tackling the rising cost of living – something that both families and businesses are struggling with. That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able.

“Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine. But to provide reassurance against the risk of prices rising again we are launching the new Energy Bills Discount Scheme, giving businesses the certainty they need to plan ahead.

“Even though prices are falling, I am concerned this is not being passed on to businesses, so I’ve written to Ofgem asking for an update on whether further action is action is needed to make sure the market is working for businesses.”

From 1 April 2023 to 31 March 2024, eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill, except for those benefitting from lower energy prices.

A substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries.

A long standing category associated with higher energy usage; these firms are often less able to pass through cost to their customers due to international competition. Businesses in scope will receive a gas and electricity bill discount based on a supported price which will be capped by a maximum unit discount of £40.0/MWh for gas and £89.1/MWh for electricity.

Energy Bill Discount Scheme summary

For eligible non-domestic customers who have a contract with a licensed energy supplier, the government is announcing the following support:

  • From 1 April 2023 to 31 March 2024, all eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill.
  • This will be subject to a wholesale price threshold, set with reference to the support provided for domestic consumers, of £107/MWh for gas and £302/MWh for electricity. This means that businesses experiencing energy costs below this level will not receive support.
  • Customers do not need to apply for their discount. As with the current scheme, suppliers will automatically apply reductions to the bills of all eligible non-domestic customers.

For eligible Energy and Trade Intensive Industries, the government is announcing:

  • These businesses will receive a discount reflecting the difference between a price threshold and the relevant wholesale price.
  • The price threshold for the scheme will be £99/MWh for gas and £185/MWh for electricity.
  • This discount will only apply to 70% of energy volumes and will be subject to a ‘maximum discount’ of £40.0/MWh for gas and £89.1/MWh for electricity.

The Chancellor has also written to OFGEM, asking for an update in time for the Budget on the progress of their review into the non-domestic market. He has asked for their assessment of whether further action is action is needed to secure a well-functioning market for non-domestic customers following reports of challenges certain customers are facing, including in relation to the pricing and availability of tariffs, standing charges and renewal terms, and the ability of certain sectors to secure contracts.

Businesses in England will also benefit from support with their business rates bills worth £13.6 billion over the next five years, a UK-wide £2.4 billion fuel duty cut, a six month extension to the alcohol duty freeze and businesses with profits below £250,000 will be protected from the full corporation rate rise, with those making less than £50,000 – the vast majority of UK companies – not facing any corporation tax increase at all.

REVEALED: How much Kevin’s electricity bill would be if Home Alone was set in 2022

KEEP THE CHANGE, YA FILTHY ANIMAL!

New data has predicted that Kevin McCallister would have racked up a £66.19 (or $80.65) energy bill in his three days Home Alone if the film was set in 2022.

Although it was released 32 years ago, in many ways, Home Alone is a timeless classic. However, if you’ve started your Christmas movie marathon already this year, you may be shocked by the HUGE amount of electricity that young Kevin McCallister uses in his time ‘Home Alone’. 

In light of the cost of living crisis, researchers at interiors brand, Bobbi Beck, have analysed the film to estimate how much money Kevin’s escapades would cost his parents if the film was set in the modern day:

The Bill

Researchers calculated that Kevin McCallister would have used at least 472.22kwh of energy in his three days left Home Alone. Based on the average residential electricity rate in his hometown of Chicago (Source: EnergyBot), Bobbi Beck predicts that Kevin’s energy bill would be AT LEAST $80.65 (or £66.19).

For context, in the UK, the average daily energy bill is around £2.70 (Source: Uswitch).

It is estimated that Kevin would have spent almost FIVE TIMES more than the average in his local area of Chicago, where the typical daily energy bill is $4.57 (Source: Energy Sage).

The Setup

How did Kevin rack up such a huge energy bill? We know that Kevin is alone for a total of three days (Source: IMDB) in a huge Chicago house, with six bedrooms and six baths (Source: Zillow). The house is apparently 4,243 square feet on a lot over half an acre in size (Source: Realtor). 

Kevin uses a lot of electricity in his various schemes, from heating up the doorknob with an electric barbeque lighter to using a record player and toy train track to mimic a party.

However, the most significant energy usage comes from the lights, both indoors and outside. During the infamous booby trap scene, we can see that every single light is on, but Kevin does turn them off when he leaves for church (Source: Youtube).

To calculate Kevin’s energy bill, Bobbi Beck investigated three areas of electricity usage: outdoor lights, indoor lights and TV use. 

Outdoor Lights

The data estimates that Kevin would have used £7.57 (or $9.22) on outdoor lighting alone if the film was set in 2022. With each side of the house stretching around 20 meters, around 10 sets of lights would be required, guzzling an estimated 54kwh for the three days (Source: Simply LED). 

Indoor Lights 

Kevin spent an estimated £58.59 (or $71.39) on indoor lighting. Researchers calculated that his home is  2.49 times bigger than an average U.S. house, meaning that they would have an estimated 99.60 lights inside (Source: Visual Capitalist).

The lights are likely to be an older, less energy-efficient model, most likely 100W in the estimation of Bobbi Beck’s researchers. They use 0.1kw an hour (Source: Ideal Home) and, because an average eight-year-old boy sleeps for around 10 hours (Source: Sleep Foundation), the lights would be on for roughly 42 hours. Therefore, Kevin would use 418kwh on indoor lights.

TV Use

Although it’s only a minor cost, researchers also uncovered that Kevin would have spent just 3p (or 4¢) on TV use. One of the most memorable Home Alone scenes sees Kevin watching a gangster film. He has a TV that is typically less energy efficient than a plasma and uses about 100 Watts of electricity (Source: Scientific American). An average film lasts 2 hours and 10 minutes (Source: Statista), so the gangster film alone would use up 0.217kwh.

James Mellan-Matulewicz, CEO of luxury wallpaper brand Bobbi Beck commented: “Most of us are currently feeling the impact of the cost of living crisis, with energy costs and food prices soaring. Not only does this impact our day-to-day finances, but it can also change our perspective on things – and Christmas movies are no exception …

“Home Alone is arguably the best Christmas movie of all time, particularly well known for its spectacular festive interiors. But when watching the film back, the amount of electricity that Kevin uses is really shocking! That’s why we wanted to crunch the numbers to find out just how much money he would have cost his parents in his three days of chaos.”

“We investigated Kevin’s lighting and TV usage to find that his energy bill would have been at least $80.65 for three days – that’s £66.19 in pounds. His TV use only cost a measly 3p, whereas his indoor lights have racked up a £58.59 bill. Given the average daily electricity bill in the UK is £2.70, it’s really shocking to see how much energy he used!”

These calculations were released by luxury, sustainable wallpaper brand Bobbi Beck, which provides a number of wallpaper designs to suit a range of tastes and personalities.