ENERGY
Challenge Poverty Week: Tuesday
Tag: energy prices
More misery for millions as winter energy prices to rise by 4%
From 1 October to 31 December 2026 energy prices will go up by 4% for a typical household who use electricity and gas and pay by Direct Debit.
Energy price cap rates 1 October to 31 December 2026
You are not affected by the changes to the energy price cap if you have changed to a fixed rate tariff.
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 26.32 pence per kilowatt hour (kWh). The daily standing charge is 54.83 pence per day. This is based on the average across England, Scotland and Wales. It does not include VAT from 1 October 2026 to 31 March 2027./
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 7.97 pence per kilowatt hour (kWh). The daily standing charge is 29.68 pence per day. This is based on the average across England, Scotland and Wales and includes VAT at 5%.
Changes to VAT from 1 October 2026*
The government has removed VAT from electricity bills from 1 October 2026 to 31 March 2027.
As a result, VAT is not included in electricity bills for people covered under the energy price cap between 1 October and 31 December 2026. You will still pay 5% VAT for gas.
This means that all households that are covered by the energy price cap (on a default tariff) will pay less for their electricity. This also applies to some small businesses.
Some people who use more electricity than gas, or only use electricity, will have a bigger reduction in their bill.
We have included this change in the figures we have published. You might not see the full impact of the VAT reduction on electricity in your bill, because gas wholesale prices are still high due to global events.
Costs cannot be compared directly to previous periods because of this change.
Unit rates and standing charges
You can get and compare by area 1 October to 31 December 2026 and 1 July to 30 September 2026 energy price cap unit rates and standing charges.
You can also find and compare all the energy price cap (default tariff) levels.
Read about who the price cap protects and how the energy price cap is calculated in energy price cap and standing charges explained.
Why energy prices are changing
This increase is a result of higher wholesale gas prices, caused by the ongoing conflict in the Middle East. However, prices are still very much below the height of the energy crisis in 2022. The government then put a limit on bills of £2,500.
Managing your energy bills and tariff
You are covered by the energy price cap if you are on a default tariff and pay for your electricity and gas by:
- 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.
You could pay less for your energy by changing your energy tariff or payment type. Find out if you can change or fix your tariff and how to switch energy supplier.
You could also save money if your supplier offers half price or lower cost electricity at weekends. Most people who have a smart meter or other low carbon technologies can take advantage of these offers.
Tell your energy supplier if you cannot pay your bills. They must help you if you ask. They could set up a repayment plan or provide you with emergency credit.
Energy price cap level dates
We review and update the price cap 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 next periods will be announced by:
25 November 2026 – period 1 January 2027 to 31 March 2027
23 February 2027 – period 1 April 2027 to 30 June 2027
26 May 2027 – period 1 July 2027 to 30 September 2027
We may publish before these dates if we need to because of external reasons.
“Households set to have their hopes dashed… but there is an escape route.”
Richard Neudegg, director of regulation at Uswitch.com, said: “Households holding out for a last-minute reprieve on rising energy bills set to have their hopes dashed, with predictions suggesting a 4% increase in the October price cap.
“With continued instability in the Middle East, higher energy costs are now looking very likely throughout winter as a third consecutive price cap hike is predicted for January.
“Those still on price cap tariffs who don’t take action before October should brace themselves to pay even more for their heating, with standard gas prices likely to be a staggering 26% higher than they were last year.
“But there is an escape route. The best fixed deals on the market right now undercut this prediction by around 12%, with the cheapest priced at £1,522 for a typical home.
“Don’t suffer higher winter bills when you don’t have to – a decent fixed tariff beats these rates and protects you from further price rises. Every week spent on a standard tariff is another week paying higher rates than you need to.”
Commenting on today’s Ofgem energy price cap announcement, Independent Age Chief Executive Joanna Elson, CBE said: “Today’s Ofgem energy price cap announcement will heap more pressure on the already stretched budgets of the 1.7 million older people in the UK living in poverty and the million others teetering on the brink.
“With winter on the horizon, older people on low incomes will once again be forced to take drastic action to keep themselves warm as rising energy bills eat away at already inadequate incomes.
“Each winter we hear heartbreaking testimony from older people wearing winter clothing to bed to fend off the cold, being forced to choose between putting food on the table or using their heating, and some are abandoning their cold homes altogether to find warmth in public buildings.
“We are urging Andy Burnham’s government to protect people on low incomes, including people in later life, from relentless energy price hikes. Boosting the Warm Home Discount from £150 to £400, funding this increase directly and improving targeting would make an immediate difference to those who cannot make ends meet.
“In the long-term, the development of a more comprehensive targeted energy social tariff is essential to protect low-income households from the all too regular price shocks that are pushing them deeper into financial hardship and poverty.”
Ofgem ‘transformed’ to strengthen protections for energy consumers
Billpayers ‘set to benefit from a stronger energy regulator to ensure they are treated fairly’
- Energy regulator Ofgem reformed to introduce stronger protections for consumers
- Households supported with faster redress if they are let down by their supplier
- Energy executives incentivised to act in consumers’ best interests
Billpayers are set to benefit from a stronger energy regulator, under reforms of its remit set out by the government today (22 April).
The transformation will empower the regulator to ensure energy consumers are treated fairly, including measures to guarantee good practice in the market. This is the first major update to Ofgem’s scope since the regulator was founded in 2000.
The comprehensive overhaul will give Ofgem new powers to act as a true consumer champion, including:
- Stronger powers for the regulator to enforce consumer law directly, meaning it will no longer need to go through a lengthy courts process to make sure customers get what they are owed if companies treat them unfairly;
- Measures to ensure energy bosses act on behalf of consumers, with powers for Ofgem to ban their bonuses if they break the rules;
- Reforms to the regulator’s remit to focus on economic and consumer protection and ensure every energy consumer is protected, including the ability to regulate in new areas of the market if needed.
Since Ofgem was established, the market has grown more complex, with a wider range of products and services for consumers to choose from – with growing numbers of customers in parts of the market which are covered by little, if any, regulation.
That includes heating oil customers, who have seen prices spike following the start of the ongoing conflict in the Middle East. Last month the government announced funding worth over £50 million to support low-income families reliant on heating oil, and committed to introducing new consumer protections to the sector.
The changes announced today mark another step in that process, transforming Ofgem so that it is fit for the future and can ensure all consumers in today’s energy market are supported.
Energy Secretary Ed Miliband said: “This Government is fighting people’s corner, and today we set out steps to strengthen protections for energy consumers.
“This includes tough and fair measures to ban energy company bonuses if they break the rules.”
Minister for Energy Consumers Martin McCluskey said: “Every household must be given a fair deal, and today, we transform our energy regulator to give families stronger protections.
“We’re giving Ofgem stronger powers to fight consumers’ corner, changing their remit so they can protect every consumer, and introducing new measures so they can hold energy executives to account.
“We’re making the market work for those who use it, working with the regulator to make sure customers are put first.
“We will continue to stand up for working people and fight their corner as we tackle the affordability crisis – our number one priority.”
Interim Ofgem CEO Tim Jarvis said: “Great Britain’s energy system is going through the biggest changes in our lifetimes, and the regulator needs to be able to keep pace with that change.
“This review sets out ambitious, necessary reforms that will enable Ofgem to meet the challenges of regulating an increasingly electrified and flexible energy system and protect consumers so they can engage confidently in markets offering new products and services.
“We have delivered significant reforms in recent years, but this review enables us to make changes at a more systemic level to ensure we are delivering an energy system that works for consumers, that is attractive to investors and provides a stable, reliable environment for participants in the industry.
“With the tools, remit and clarity to deliver this, we look forward to working with the Government, consumer representatives and the energy sector to drive the change that’s needed – both in Ofgem and across the energy sector.”
To deliver the shift, Ofgem’s remit will be streamlined to focus on its core functions as an economic and consumer protection regulator. This involves removing Ofgem’s responsibility for oversight of home upgrade schemes in a role that is set to be performed within government by the Warm Homes Agency.
This will help equip Ofgem to drive forward clean power and economic growth, ensuring regulation supports innovation, unlocks investment in Britain’s electricity networks, and helps to modernise the energy system.
Ofgem’s capabilities will also be reformed, with its technical expertise strengthened, its use of data improved and its approach to risk reassessed – enabling the regulator to take faster decisions in the interests of consumers.
They will also develop a workforce plan, building on changes already underway, to ensure staff have the right skills to deliver the changes required, supported by stronger board‑level oversight of skills and culture.
The changes build on the reforms the government and regulator have already delivered to rebuild the energy retail market and improve standards in the sector – driving customer satisfaction with their suppliers to record highs.
They follow the government’s proposals to protect energy consumers with fairer, quicker and easier access to compensation when they are let down, as well as Ofgem’s plans to make sure suppliers’ Guaranteed Standards of Performance reflect the evolving energy system.
The plans come as the government is continuing to fight people’s corner in response to the impacts of the conflict in the Middle East. Yesterday (21 April) the Energy Secretary set out plans to go further and faster on the mission to make the UK a clean energy superpower and protect people from the increasing global fossil fuel price shocks.
Gillian Cooper, Director of Energy at Citizens Advice said: “We welcome the actions set out in the review, which will strengthen consumer protections, enable a fair transition to green energy and give Ofgem the tools it needs to enforce the rules.
“Ofgem should now seize the opportunity to bring about a more innovative market, with better choices and protections for consumers, ensuring energy suppliers know there are real consequences for falling short.
“Effective regulation is one pillar which underpins a well-functioning energy system. But consumers also need strong advocacy, trusted advice and the ability to get problems sorted quickly and fairly, so they can make informed decisions and know they won’t be left out of pocket if things go wrong.”
Laura Sandy CBE, Chair of the Energy Network Innovation Taskforce and Green Alliance said: “Excellent to see that the review is focused on the clarity of Ofgem’s role, streamlining its role to become a truly modern regulator, moving from technology-based regulation to a consumer centric model and being responsible for driving growth.
“While, consumer protection and network regulation are the core functions, I hope that these roles also mean driving growth, unlocking wider societal opportunity and delivering customers greater choice.
“The culture within the organisation is a strong theme throughout with the need to move from a process, input regulator, to a dynamic opportunity and risk regulator. Crucially there are excellent recommendations around independent assessment on progress supporting Ofgem in the delivery of their new remit.”
Letter: Fair Energy Pricing for Scotland
END THE ONE-SIZE-FITS-ALL MARKET
Dear Editor,
Scotland is in the absurd position of producing more electricity than we need, while families and firms here face some of the highest bills in Britain. Fuel poverty is rampant, reaching nearly 50% in the northernmost parts of the country, despite Scotland’s renewable capacity only set to grow, with projects like Berwick Bank expected to generate power for more households than exist in Scotland.
One practical approach is zonal pricing, setting electricity prices by geographic region so that areas with abundant local generation benefit from lower supply costs and reduced transmission costs.
In plain terms, power produced on and off Scotland’s shores should not cost Scottish households and businesses a premium once it reaches the meter.
Zonal pricing reflects local supply and demand, and recognises that the real expense lies in grid infrastructure, pylons, cabling, and reinforcement, rather than in “sending” electrons down the line.
Instead, we are currently being forced to accept a vast expansion of pylons across our land because the grid is inadequate for the volume of generation, with “curtailment” running into billions, paying wind operators to switch off while consumers still pay through the nose.
A new pylon network is planned from the north of Scotland down the east and through the Borders to supply demand further south, bringing long-term visual and environmental damage, disruption to arable land and watercourses, and little or no benefit to the communities affected.
As an ALBA Glasgow List Candidate, I, Dhruva Kumar, am calling for a fair deal, implement zonal pricing so Scots can finally share in the value of the energy we produce, cut fuel poverty in a cold country, and make Scotland competitive again for manufacturing, hospitality and the green supply chain.
If Westminster will not act, then Scotland’s councils and government should refuse consent for pylons that export our energy while leaving our people paying the price.
Yours faithfully,
Dhruva Kumar
ALBA Party, Glasgow List Candidate
Depute Convenor, ALBA Glasgow
Calls for UK Government to take action on energy bills
Social Tariff can deliver “transformational impact” on fuel poverty levels
Housing Secretary Màiri McAllan has called for urgent action from the UK Government on energy bills, as new modelling finds that around 660,000 households could see estimated fuel bills cut by an average of £700 under Scottish Government proposals for targeted discounts.
New scenario modelling on a targeted unit rate discount and targeted removal of standing charges – or Social Tariff – published today by the Scottish Government, suggest it could lift 202,000 households in Scotland out of extreme fuel poverty and reduce the number of households in fuel poverty entirely by around 135,000, with a UK Government investment of £475 million per annum.
Today’s modelling builds on the work undertaken by the Social Tariff Working Group – comprising energy suppliers, consumer and fuel poverty groups and disabled people’s organisations.
Màiri McAllan said: “In an energy-rich nation like Scotland, no one should be struggling to pay their energy bills – yet far too many people are struggling with bills still higher than they were this time last year.
“The UK Government promised to cut people’s bills by £300 – instead bills have risen by almost £200. We must see action from the UK Government now.
“Today’s evidence shows that under our proposals for targeted discounts, around 660,000 households in Scotland would see their estimated fuel bills go down by an average of £700 – with more than around 135,000 households lifted out of fuel poverty and more than 200,000 lifted out of extreme fuel poverty.
“We have worked closely with energy providers, consumer groups and others to develop these concrete, deliverable plans which would have a transformational impact on people in Scotland during the cost of living crisis.
“The UK Government is not going to reduce fuel poverty without investment – but set against the impact of fuel poverty, which research suggests costs the NHS across in England alone £1.4 billion per year, this investment is not just the right thing to do, but is a smart, preventative spend.
“High energy bills are causing misery for people throughout Scotland and I am calling for the UK Government to use the powers at their disposal and take action to support people now.
“UK ministers have been quick to tell us what they will not do to cut energy bills and reduce fuel poverty – they must now tell us what they will do.”
Frazer Scott, Chief Executive Officer, Energy Action Scotland said: “It is abundantly clear from the report published by the Scottish Government that the introduction of a social tariff or social discount would have a transformational impact on low-income fuel poor households and people with serious health conditions or disabilities.
“The current approach of a wholly inadequate payment £150 through the Warm Home Discount provided through energy suppliers is simply no longer fit for purpose.
“Energy Action Scotland urges the UK Government to introduce a social tariff or social discount of the type modelled in this report and provide meaningful support for households unable to heat and power their homes.”
David Hilferty, Director of Impact, Citizens Advice Scotland said: “Energy is one of our fastest growing advice areas across the CAB network – up 150% compared to the period before the pandemic and the twin cost of living and energy crises. A social tariff for energy is no longer a nice-to-have – it is now an essential and imperative need.”
Scenario modelling on Social Energy Tariff Proposal
Based on Scottish Household Condition Survey data, eligible households would receive on average a £1,000 reduction on their modelled fuel bill.
As this estimate is based on modelled fuel bills to meet the heating regimes set out in the Fuel Poverty definition in Scotland, we have also provided a calibrated cost based on DESNZ average domestic consumption data.
For the calibrated cost, the average fuel bill reduction per household is £700 and would require a UK Government investment of around £475 million per annum.
Vulnerability partners reflect on winter challenges as part of SGN collaboration event
Our Winter’s End Safe and Warm Partnership Conference 2025 in London brought together experts from organisations such as Age Scotland, Citizens Advice, Energy Systems Catapult, Fuel Bank Foundation, National Energy Action and Scope, who are all part of our Safe & Warm partnership network supporting vulnerable people in the communities we serve.
Experts from the energy, advice, government and charity sectors took part in panel sessions and open discussions to share the real world impact of financial cuts on the communities they’re helping and the daily challenges faced by individuals to keep their homes safe and warm, particularly during the colder months.
It was a crucial opportunity for delegates to reflect on the challenges experienced during the winter and share their insight, as well as collaborate on ways to work together in future to support vulnerable communities across SGN’s network areas in southern England and Scotland.
Together, we have so far supported 693,956 households and we expect this number to rise significantly over the coming months.
Held as a hybrid event, the conference had live interviews from key specialists streamed to the online audience, providing an opportunity for all partners to meet and discuss opportunities to collaborate with one another. We’ll be using discussions from the event to inform how we can evolve our partnership network and find new opportunities to plug gaps in support.
A key theme which emerged from the conference was the impact that cuts to benefits are having on the vulnerable people who our attendees are helping every day. Also, the value which our partner organisations create in supporting people who need extra help.
The conference opened with a keynote speech from National Energy Action Chief Executive Adam Scorer, who spoke about the need for local energy plans to be aligned with health plans in communities. He highlighted the long-term commitment of partners to our Safe & Warm network that enables organisations to provide enduring support.
Some of the key highlights from attendees included:
- Molly Shevlin from Citizens Advice Scotland said they’re seeing people with issues that are complex and multilayered, requiring dedicated support from multiple organisations.
- Rachel Boland from Age UK Oxfordshire highlighted a new challenge they’ve seen this winter of pensioners experiencing longer wait times for an outcome on pension credit applications.
- Lee Healey from IncomeMax said that although digital exclusion can be a barrier to some vulnerable people obtaining the support and benefits they’re entitled to, many people are keen to use digital solutions to boost their income.
- Helen Stockton from National Energy Action highlighted how net zero solutions need to be designed with vulnerable people in mind, with Bridget Newbery from Centre for Sustainable Energy adding that conversations around net zero need to be with people and not to people, and need to be meaningful to people’s everyday lives in order to engage them. She also discussed the need to check people who receive new technologies know how to use them.
- Stella Osan from Mencap Croydon spoke out about the rising issue of damp in vulnerable homes, with stories she’s heard of landlords painting over dangerous black mould instead of working with tenants to tackle the problem. Richard DeNiese of Mencap Worthing added that it can often lead to people with autism struggling to make the right short-term decisions of keeping windows open to help remove the mould or to keep them closed in order to keep in the heat.
Maureen McIntosh, Director of Customer Service at SGN, explained how hosting the conference is part of SGN’s work to bring partners together to support vulnerable customers to use energy safely, efficiently and affordably.
She said: “We really appreciate how many people took the time to attend and take part in our Winter’s End partners conference. It highlights the importance of working together as we face the challenges that winter brings to communities across the UK.
For more information on how SGN partners with other organisations to support vulnerable households, visit https://www.sgn.co.uk/about-us/supporting-vulnerable-households
Happy New Year? Energy price cap will rise by 1.2% from January
Energy regulator Ofgem has today (Friday 22 November) announced a 1.2% increase of the energy price cap for the period covering January-March 2025.
The change to the price cap – which sets a maximum rate per unit and standing charge that can be billed to customers for their energy use – will rise by £21 for an average household per year or around £1.75 a month.
For an average household paying by Direct Debit for dual fuel this equates to £1,738 per year. This is 10% (£190) cheaper compared to January-March 2024 (£1,928) and 57.2% (£2,321) less than the energy crisis (January-March 2023).
It comes as analysis by Ofgem shows around 1.5million households switched tariff over the past three months. The regulator is urging customers to take advantage of the rising choice in the market and look for the best deal to help keep their household bills down. By switching, savings of up to £140 are currently available.
Following a call by Ofgem in August for suppliers to offer more choice with low and no-standing charge tariffs, there has been an increase in the number of suppliers offering these kinds of deals. There are currently 8 available that are at least 10% below the level set in the price cap.
However, while these come with a lower standing charge, they do have a higher unit rate. They could benefit customers with lower energy usage but will not work for everyone so consumers should carefully consider what works for them.
Tim Jarvis, director general of markets at Ofgem, said: “While today’s change means the cap has remained relatively stable, we understand that the cost of energy remains a challenge for too many households.
“However, with more tariffs coming into the market, there are ways for customers to bring their bill down so please shop around and look at all the options.
“Our reliance on volatile international markets – which are affected by factors such as events in Russia and the Middle East – means the cost of energy will continue to fluctuate. So it’s more important than ever to stay focused on building a renewable, home-grown energy system to bring costs down and give households stability.
“In the short term though, anyone struggling with bills should speak to their supplier to make sure they’re getting the help they need and look around to make sure they’re on the best, most affordable deal for them.”
The regulator is encouraging customers to consider the way they pay their bills. Around 5 million customers pay by standard credit payments – which means paying for energy after it has been used. But this is much more expensive, particularly over the winter months.
Customers could save £100 by simply switching from standard credit payments to Direct Debit payments or smart PPM, which remains the cheapest way to pay for energy.
The cheapest deal on the market could save a typical dual fuel customer £210 compared to the upcoming price cap level. However, this requires signing up for an additional boiler cover service.
There are other cheaper fixed deals on the market which don’t require additional services that could save customers more than £140 per year compared to the upcoming cap level.
If consumers are worried about paying their bills, they can contact their supplier for support. Ofgem’s rules mean they must work with their customers to agree an affordable payment plan. They may also be able to help by offering more time to pay, access to hardship funds and advice on how to use less energy.
Age Scotland’s Policy Director, Adam Stachura, said: “This latest increase to the energy price cap is yet another blow for older people facing the coldest months without the safety net of the Winter Fuel Payment.
“At a time when many are already feeling under pressure, news that bills are set to rise further still will put those already struggling in an extremely difficult position. They will be very disappointed that there is no end in sight, and no support measures identified for those not claiming or not eligible for Pension Credit.
“Pensioners in Scotland are the most starkly affected by fuel poverty, so government must deliver much more to support them or the numbers in this grim position will spiral further. This another compelling reason for the Scottish Government to bring back the universal entitlement to the Winter Age Pension Heating Payment next winter.
“With Scotland already recording the coldest temperatures in the UK, we are seriously concerned about older people’s health being jeopardised if they are unable to heat their homes.”
Consumer Scotland Head of Energy Kate Morrison said: “Although lower than at the peak of the energy crisis, energy bills are still historically high and will rise further in January.
“One of the legacies of the past two years of high bills has been a growth of energy debt and arrears in the GB domestic market which now exceeds £3.6bn – a record high – and bill increases will impact further on levels of debt
“This will be a challenging winter for consumers, particularly those with higher energy needs including disabled people and those with health conditions.
“There is a need for governments to design and deliver better targeted energy affordability support for consumers, particularly given current levels of debt and ongoing pressure on household budgets.”
Ofgem: Increased wholesale energy costs lead to rise in price cap
Energy regulator Ofgem has today (Thursday 23 November, 2023) announced the energy price cap for the first quarter of 2024.
The price cap will increase by 5% on the previous quarter from 1 January to 31 March 2024. For an average household paying by direct debit for dual fuel this equates to £1,928, a rise of £94 over the course of a year – around £7.83 a month. The price cap, updated every quarter, sets a maximum that can be charged to customers for energy bills.
Ofgem’s priority is to protect consumers and ensure that they pay a fair price for their energy. Today’s price increase is driven almost entirely by rising costs in the international wholesale energy market due to market instability and global events, particularly the conflict in Ukraine.
The regulator will continue to use all levers available to ensure costs are spread fairly and customers struggling with bills are supported. It has today further developed plans to permanently remove the so-called ‘prepayment meter premium’ to ensure that prepayment customers are charged the same standing charge as direct debit customers. Ofgem has already launched a ‘Call for Input’ on standing charges running until 19 January, 2024.
Jonathan Brearley, CEO of Ofgem, said: “This is a difficult time for many people, and any increase in bills will be worrying. But this rise – around the levels we saw in August – is a result of the wholesale cost of gas and electricity rising, which needs to be reflected in the price that we all pay.
“It is important that customers are supported and we have made clear to suppliers that we expect them to identify and offer help to those who are struggling with bills.
“We are also seeing the return of choice to the market, which is a positive sign and customers could benefit from shopping around with a range of tariffs now available offering the security of a fixed rate or a more flexible deal that tracks below the price cap.
“People should weigh up all the information, seek independent advice from trusted sources and consider what is most important for them whether that’s the lowest price or the security of a fixed deal.”
Ofgem recently set out new rules for suppliers making clear that they should be prioritising enquiries from vulnerable customers who need help and proactively reaching out to households if they miss two monthly or one quarterly payment, check to see if they are struggling with bills and, if so, offer support such as affordable payment plans or, if appropriate, repayment holidays.
The regulator has also taken robust action to raise standards of customer service and worked in conjunction with suppliers and consumer groups to encourage industry to support those struggling with their bills, including the Winter 2023 Voluntary Debt Commitment recently announced by Energy UK and Citizens Advice.
A Statutory Consultation on levelling standing charges for prepayment meter and direct debit customers so customers pay the same daily charge has been published today.
Previously, customers on prepayment have been charged more than those who pay by direct debit to cover the additional costs and resources required by suppliers to provide their services.
In October 2022, the government introduced measures to temporarily remove this ‘PPM premium’ via the Energy Price Guarantee, which remains in place until April 2024.
Following a consultation this summer, Ofgem is now proposing an enduring solution that would ‘levelise’ these standing charges to coincide with the end of that government support. This consultation also sets out proposals to share the costs of bad debt more equally across customers to reduce the premium paid by standard credit customers (those who pay on receipt of a monthly or quarterly bill for the exact amount of energy used).
Under the terms of the regulator’s proposal, this would save PPM customers around £50 a year, reduce Standard Credit bills by around £45 a year but add around £20 a year for direct debit customers. Ofgem is keen to hear views on this proposal from all interested parties.
This follows the launch of a wider conversation on the issue of standing charges last week and how they should be set, which has already attracted a high number of responses in the first week of the consultation.
In response to today’s Ofgem energy price cap announcement, Joanna Elson CBE, Chief Executive of Independent Age said: ““Today’s energy price cap announcement offers little reassurance for older people in financial hardship, with bills still 85% higher than before the energy crisis.
“We speak to people in later life who are living in one room because they can’t afford to properly heat their home, those who risk falls because they aren’t turning on the lights, and older people who are in thousands of pounds of debt to energy suppliers. They urgently need help.
“With average energy prices having close to doubled in recent years, coupled with rocketing household costs such as water, food and broadband, those on a low income have endured several years of sky-high costs from all angles. Older people in financial hardship are especially vulnerable to sharp price increases, as many are on a fixed income. The extra money simply isn’t there.
“The UK Government needs to announce financial support now to help the most financially vulnerable, including those in later life, get through this winter. After that, we need a long-term solution to protect against the impact of continuing high prices, including energy.
“Our evidence shows an energy social tariff would offer more stability to older people on a low income and make sure no one is forced to make dangerous choices. This must be something the UK Government consults on.”
The next quarterly price cap announcement will be announced in February 2024, covering April – June 2024.
The Final Curtain?
QUARTER OF MUSIC AND THEATRE VENUES CONCERNED ABOUT CLOSURE
- A quarter of music venues (27%) are concerned they may need to close down[1], as more than a third (35%) of business expenses go towards energy bills[2]
- Many are running at half capacity (50%)[3], and have resorted to production cost cutting (17%)[4] and raising ticket prices by up to 25%[5]
- Two in five (39%) have also found that customers are purchasing less expensive seats and buying fewer refreshments[6]
- Three in five (60%) music venues say that energy bills are their top concern for the next year, above inflation rates and staff costs[7]
- Uswitch for Business energy expert, Jack Arthur advises businesses to check the contract they are on and to review energy usage across all organisational levels.
Energy bills are taking the centre stage of concern for live performance venues, as energy bills make up more than a third of overall business costs, according to Uswitch for Business, the business energy comparison and switching service.
Performance venues are widely recognised as energy-intensive spaces, and the new research of UK music venues, concert halls and theatres shows over a quarter (27%) are concerned about potential closure due to rising costs.[1]
Air conditioning, heating, as well as extensive sound and lighting systems required to create immersive experiences for audiences are all adding towards total energy expenditure costs, with venues needing between 6 -1,000 kw to power low level concerts to major artist events[8].
Venues of all sizes report running at half capacity (50%) on average[3]. More than one in four (26%) sold fewer tickets this year, compared to last year. [9]
Consumers attending live performances are also more inclined to choose less expensive seats (39%) or buy fewer refreshments (39%)[6].
The show must go on: responding to the high energy costs
One in six (15%) venues report having to increase ticket prices[4], at an average of 25% per ticket to cover increased expenditure[5]. In addition, more than a quarter (27%) have also increased the prices of refreshments.[4]
Venues are also looking at new ways to reduce their energy output to directly tackle the problem. Training staff in energy efficiency measures (45%), switching to more energy efficient or LED lighting for both onstage and offstage (41%), and turning off, down or restricting air conditioning and heating (36%) are just some of the tactics. [4]
Nearly one in five (19%) are also choosing to only open their doors during peak times of the week, and 17% are using less energy intensive movable staging and production measures.[4]
But as energy prices continue to oscillate at high levels, three in five (60%) businesses are citing bills as their top concern for the next year, followed by inflation rates (41%) and staff costs (30%).[7]
Venues say they may have to make considerable changes if business costs were to increase further, especially as more than one in three (34%) state their business margins are now lower than before the cost of living crisis.[6]
Two in five (40%) fear they may have to make staff redundant to reduce costs, and one in three (35%) worry they may not be able to pay their energy bills on time.[1] Overall, 32% feel anxious about the future of the industry.[10]
Jack Arthur, energy expert at Uswitch for Business comments: “Live performances are central not only to the UK’s culture and entertainment sector, but also to the UK economy.
“While the sector has seen some recovery since the pandemic’s impact, the cost of energy has added new additional challenges.
“With higher utility costs taking the stage, venues need to be meticulous about how energy usage is being considered at all levels of their organisation – from the stage floor to sound production.
“Investing in more energy efficient appliances where possible may help to bring costs down, and prevent the final curtain for many.
“Music venues should also make sure they’re aware of their energy contract terms and end date, so they can shop around for the best rates at the time of renewal. Getting expert advice where needed and speaking to someone could help many businesses make significant savings.”
Elspeth McBain, Chief Executive of Lighthouse Poole Centre for Arts says: “Energy costs have been a major challenge to our venue, and indeed all venues in the last year, just as we were beginning to recover and get back on our feet following the devastating effect of the pandemic on culture and hospitality.
“In 2023 our electricity bill alone will increase by 200% and we are doing everything we can to meet this cost. However, this is on top of the significant increase in the cost of living which has increased our costs in all areas of the business and has also meant our audiences have less leisure spend available, restricting the number of times they can attend cultural events.
“Together, these factors have made it a testing time for organisations like ours and theatregoers alike. I am desperate for energy and living costs to come down so that we can keep bringing top class artists and productions to Poole, support local talent development, provide opportunities for cultural participation, and ensure that culture within our region continues to play a vital part in our community.”
Mark Davyd, CEO & Founder of the Music Venue Trust says: “We have seen an incredible explosion in energy prices right across the grassroots music venue sector in the last 12 months.
“The current situation is really on a knife edge, with venues essentially clinging on to the end of existing fixed term contracts and any new tariff effectively immediately creating a venue under threat of permanent closure.
“We desperately need some action from Ofcom and the Government to make the energy market work for music.”
The issue will be debated at the ‘Festival of Politics,’ which will be held in Edinburgh between Wednesday 9-11 August.
The panel, being held on the evening of the 11th, is entitled ‘Scotland’s Music Venues’ will examine why, despite Scotland’s worldwide reputation as a music nation, Grassroots Music Venues are under extraordinary financial pressures with many facing closure, and how politicians can step-up and help create security for these spaces.
Chaired by Michelle Thomson MSP, Convener, cross-party group on music, the panellists will include Scottish singer-songwriter Hamish Hawk, MVT COO Beverley Whitrick and major event professional Jim Frayling.
Entry to this event is £6 or £4 concessions – available here: https://www.festivalofpolitics.scot/…/scotlands-music…
Unless otherwise stated, all figures taken from omnibus research carried out by onepoll on behalf of Uswitch for Business.
This was an online poll of 100 entertainment venue decision makers in the UK. The research was conducted between 6th and 9th June, 2023.
- Respondents were asked ‘If costs of the business you work at were to increase to higher levels, which of the following do you believe could happen to the business?’, 40% said ‘it may have to make staff redundant’, 35% said ‘it might be unable to pay energy bills on time’, and 27% said ‘it may have to close down’.
- Respondents were asked ‘Please estimate the proportion of your total business expenses that can be attributed to energy bills?’, the average response was 35.2%.
- Respondents were asked ‘At what capacity (i.e., number of tickets sold) is the business you work at currently operating at for shows/performances?’, the average response was 50.4%.
- Respondents were asked ‘What actions is your business taking to deal with high energy costs?’, 45% said ‘training all staff in energy efficiency measures’, 41% said ‘switching to more energy efficient / LED lighting (onstage or around the venue), 36% said ‘turning off, down or restricting air-conditioning or heating’, 27% said ‘increasing prices of refreshments at venue bars’, 19% said ‘opening the venue only during peak times of the week, 17% said ‘using less moving staging and production during shows, and 15% said ‘increasing prices of tickets’.
- Respondents were asked ‘By what percentage have you had to raise overall prices?’, the average response was 25.1%.
- Respondents were asked ‘What effects has the cost of living / rising energy prices had on your business?’, 39% said ‘customers are buying less refreshments’, 39% said ‘customers are choosing less expensive seats when buying tickets, 34% said ‘our business margins are smaller than previously’, 19% said ‘less of a demand for on the day tickets’.
- Respondents were asked ‘What are your biggest concerns for your business in the next year?’, 60% said ‘energy bills’, 41% said ‘inflation rates’, 30% said ‘staff costs’, 27% said ‘customers reducing non-essential spending’.
- https://tseentertainment.com/electrical-needs-a-big-part-of-concert-production/
- Respondents were asked ‘Does your business currently have as many tickets sold compared to this time last year?’, 26% said ‘it has less tickets sold than this time last year’.
- Respondents were asked ‘Which of the following statements do you agree with’, 36% said ‘my business was just starting to recover from the impact of the pandemic, and now energy costs are providing an even worse challenge’, 35% said ‘I am hopeful that the price of energy will drop in the next 3-6 months’, and 32% said ‘I feel anxious about the future of the industry’.
- https://www.choura.co/small-vs-large-concert-venues-which-is-better/#:~:text=Mid%2Dsized%20music%20venues%20typically,capacity%20of%20less%20than%201%2C000. (small – less than 1,000 seats / large – up to 20,000 seats)
Prepayment meter customers to pay less for energy from today
Prepayment meter households will no longer pay more on average for their energy than direct debit customers, as the UK Government scraps unfair charge
- Unfair charge on prepayment meter customers scrapped
- change will help around three million households and save on average £21 a year
- together with the new energy price cap taking effect today, households will save hundreds of pounds on their bills
Fairness will be delivered for households today as the government scraps the unfair charge on prepayment meter customers.
The change, taking effect from today, will help around three million households using prepayment meters across Great Britain – bringing their bills in line with those who pay by direct debit, with the government stepping in to cover the difference.
Currently, households on the pay-as-you-go meters pay more on average than direct debit customers, as it costs suppliers more to service their homes – such as collecting payments or giving out vouchers – with the charges passed onto consumers.
Removing the prepayment meter premium means these households will save around £21 a year on their bills, making sure the system is fair and providing extra support to consumers who are typically on low incomes.
Scrapping the prepayment meter premium comes as Ofgem’s latest price cap takes effect today – which thanks to improvements in the wholesale market, will bring the typical annual energy bill down from £2,500 under the Energy Price Guarantee to around £2,074. This will help lower inflation – one of the Prime Minister’s five promises – as high energy prices drive up prices across the economy.
The fall in energy bills will save the average household around £426, or 17%, and means for every £100 previously spent on energy bills, consumers will now pay £83.
Energy Consumers and Affordability Minister Amanda Solloway said: “No one should be charged more for having a prepayment meter – today, we’re putting an end to this historic injustice.
“With households on prepayment meters typically on some of the lowest incomes, this is a vital change.
“Alongside the hundreds of pounds coming off energy bills from today, thanks to the fall in the price cap – this will offer extra help to ensure families stop being unfairly penalised.”
To ensure the prepayment premium comes to an end as quickly as possible, the Government will be funding the change up to April 2024. Ofgem as the energy regulator will be devising a plan that will eradicate it permanently after that date.
Earlier this year the government took steps to crack down on the abuse of prepayment meters by energy suppliers. The Energy Security Secretary Grant Shapps demanded action from Ofgem and suppliers to put an end to wrongful prepayment meter installations in vulnerable households.
The government is clear moving customers to prepayment meters must always be the very last resort and has asked for regular updates from Ofgem and consumer groups to make sure all suppliers adhere to the regulator’s new Code of Practice – which puts measures in place to protect against them being installed in homes where they shouldn’t be.
Recent figures showed nearly £40 billion was spent by government between October 2022 and March 2023 to help keep household and business energy bills down, the most ever provided to subsidise household bills in UK history.
Over winter, the government covered nearly half a typical household’s energy bill and saved the average home roughly £1,500 by the end of June. That included providing £650 million to households on traditional prepayment meters through the Energy Bills Support Scheme.
The scheme saw vouchers totalling £400 issued over six months from October with latest figures showing 85% had been redeemed by the end of May.
While the deadline for applications has passed, that number is expected to rise with the last applications and reflected in figures due over the Summer.