Heating and plumbing industry organisations have responded to a steep rise to the energy price cap this week.
Ofgem has confirmed a 54% rise on the energy price cap from April 2022, increasing from £1,277 set in October 2021 to £1,971.
It represents an average of £695 in energy price hikes for the 22 million households on a variable rate, and huge rises for those coming to the end of their fixed deals, noted the Chartered Institute of Plumbing and Heating Engineering (CIPHE).
The energy cap price increase comes in the wake of record gas energy market prices caused by the global supply crisis. The cost of gas has risen four-fold within a year.
Government has stepped in to lessen the impact by introducing a raft of measures to cut bills, including a £200 discount on their domestic electricity bills in October 2022, which will be repayable. The discount will automatically be repaid in equal £40 payments over five years.
In April 2022, households in England in Council Tax bands A-D will also receive a £150 tax rebate, which will not need to be repaid.
“OUR INDUSTRY WILL BE CENTRAL”
Kevin Wellman, CEO of the Chartered Institute of Plumbing and Heating Engineering (CIPHE), said: “We are extremely concerned about the impact this will have on households. Even with government help, energy price rises will spell disaster, especially for the most vulnerable.
“This, combined with tax and interest rate rises, soaring food costs and inflation hitting a 30-year high means we are entering the perfect storm. The figures I’ve seen quoted estimate some 6.32 million households in Britain – that’s more than 15 million people – will be living in fuel poverty this year.
“Next winter will be extremely harsh, especially if the estimates come true of further energy price cap rises in October 2022. This will have massive implications on health and knock-on issues such as water poverty, as households are forced to decide between heating and eating. The elderly, disabled and those in rented accommodation are at particular risk, as they are more likely to have inefficient heating systems, in ill insulated properties.
“Our industry will be central to helping consumers make good choices when it comes to both using and upgrading their systems. Whether that’s improving existing efficiencies by fitting controls and TRVs, or replacing old and inefficient boilers with the latest boiler technology or renewables, the installer has an important role to play. Who else is better placed to tell their clients how to get the best from their systems and make them more energy aware?
“With the cost of energy likely to rise further throughout 2022 and beyond, we have to take serious steps to improve the energy efficiency of homes. It’s vital government measures continue to tackle the fundamental issue of energy use, and don’t just use a sticking plaster of energy bill rebates to help households pay costs.”
“HEAT NOW, PAY LATER”
Mike Foster, CEO of the Energy and Utilities Alliance, added: “Now we know the impact of the global energy crisis upon the average consumer, a price cap increase of £693 to £1,971 a year. Millions more households will now be thrown into fuel poverty, through no fault of their own and that unenviable choice, between heating and eating will become the reality for more in our communities.
“It would be churlish to ignore the government’s response, any help is better than none. But using council tax to rebate bill increases seems a very blunt instrument, which fails to take into account actual household incomes but does reflect 1991 house values. I fear the distribution of this rebate will not be fair and many winners will not be the low paid.
“The proposed loan to energy companies to keep bills £200 lower now, but to be paid back later, is a stunt designed to appear to help. It is a heat now, pay later scheme that simply delays the pain not reduce it.
“But the fundamental root cause of the problem has not been addressed in today’s announcement. How does the UK shift away from global fossil fuel prices? We now need a firm commitment from the government to wean us off natural gas and onto hydrogen, which we can produce ourselves, and convert our world-class gas network to run on hydrogen. That way, Putin will not hold us hostage, with his fingers turning the gas taps off, jacking up prices and forcing UK households to choose between heating and eating.”