The Good Law Project, alongside Fuel Poverty Action and the chair of the Highlands and Islands Housing Associations Affordable Warmth Group, has sent a formal pre-action letter to energy regulator Ofgem demanding that it protects at-risk groups from rising energy costs in advance of its increase to the energy price cap due to be announced on August 26.
“One of Ofgem’s core functions is to protect the interests of consumers from energy companies making excessive profits, and it has a specific legal duty to protect vulnerable groups,” the campaign group said in a statement released this morning.
It has been predicted that the energy price cap will be increased to £3,582 from October, a 180per cent increase on the same time last year. While energy companies are currently making record profits, a recent report has found that 35million people in 13million households – almost half the country’s population – are now under threat of fuel poverty, owing to a combination of energy price caps and inflation.
Ofgem has the powers to impose a “social tariff” – a separate, lower price cap for vulnerable users – but it hasn’t announced any plans to do this. Good Law Project believes Ofgem is failing in its legal duty to protect vulnerable people.
“Ofgem has the power to protect vulnerable people from the devastating increases in energy costs and we think they should use them,” said Jo Maugham, director of Good Law Project.
“Having failed to properly assess the risks, they don’t seem to be planning any steps to protect vulnerable groups. We hope we’re wrong and that Ofgem is doing all this behind the scenes. But we don’t want to wait for their August 26 announcement to find out – we’ve put them on notice that if they don’t properly comply with their legal duties before announcing the next increase, we’ll be ready to challenge it straight away.”
In July, Good Law Project asked Ofgem to confirm that it wouldn’t raise the cap without properly assessing the impact an increase would have on vulnerable groups. In particular the elderly, the disabled, those in rural areas, people on pre-payment meters and people in “off-gas” areas (that is people without a mains gas connection whose costs are much higher). And for assurances that it would also take steps to mitigate those impacts.
Ofgem’s position was that it didn’t need to carry out a formal impact assessment as one was done in 2018.
The regulator considers the best way to protect people is by stabilising the market so that suppliers don’t fail. However, Ofgem admitted on August 4 that there is “a risk that the price cap at this level could result in some suppliers being in a relatively healthy cash position”.
Ofgem has 10 days to respond.
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