Articles by Sidhi Mittal

Business

Ofgem’s energy price cap hike sparks calls for home energy efficiency funding

The new price cap adds around 28p a month to the average dual-fuel household bill. This sets an annual cost of £1,758 for a typical home paying by Direct Debit. Although the rise is modest and the cap remains 2% lower in real terms than the same period last year, homes and businesses are still paying significantly more than before the energy price crisis. KPMG UK’s vice chair and head of energy and natural resources Simon Virley CB said: “The slight increase in the Ofgem price cap from January despite falling wholesale prices, is not good news for households struggling with the cost of energy, as average bills remain significantly higher than four years ago. “Beyond January, without any Government intervention, the price cap is widely expected to rise again in April due to increasing network charges, and new subsidy costs – not just for renewables, but also Sizewell C.” Virley added that the Government needs to show how its Clean Power Plan is reducing bills, with attention now focused on the upcoming Budget. ECIU’s energy analyst Jess Ralston said: “To use more of our own power and ensure we’re less reliant on foreign gas imports and its price swings, investing in an upgraded power grid is crucial. “The Energy Crisis Commission has said the Government’s promised Warm Homes Plan is important to help the most vulnerable households reduce bills and be warmer and healthier.” Fossil fuel reliance has cost UK £183bn since 2021 The Ofgem announcement comes as new analysis from the ECIU and climate think-tank E3G shows that the UK’s dependence on fossil fuels has cost the economy £183bn over the past four years since Russia’s invasion of Ukraine. The figure exceeds the £177bn NHS England budget for 2024/25 and includes the extra £59bn households have spent on gas, electricity, and transport fuels. Businesses and public sector bodies faced an additional £65bn in energy costs, while the collapse of more than 30 energy suppliers added £4.5bn. Government support schemes for households and businesses cost £64bn and were only partly offset by windfall taxes, leaving a net public finance burden of almost £55bn with annual interest payments of £2.4bn due until 2037. With the Chancellor expected to announce measures to reduce energy costs in the forthcoming Budget, proposals to cut funding for insulation and clean technologies have drawn criticism from civil society groups, unions and businesses. Experts warn that such cuts would increase fossil fuel dependency, worsen fuel poverty, and push bills higher in the long term. E3G’s UK director Ed Matthew said: “We have to get off the gas price rollercoaster and that will only happen if the Chancellor makes electric heating cheaper than gas. “The Chancellor must also not axe the ECO levy, the UK’s biggest energy efficiency scheme for low-income households. This would be robbing Peter to pay Paul, preventing millions of households from reducing their energy bills in the future. “The UK has the worst-insulated homes in Western Europe and imports most of its energy. The only long-term solution is a reformed and ambitious insulation programme and ramping up clean, British renewable power to get off gas for good.”