Ofgem cuts energy price cap – Northern Isles MP responds

Orkney and Shetland MP, Alistair Carmichael, has today responded to energy regulator Ofgem’s announcement of a cut in the energy price cap. Energy bills will fall by an average of 12% for most people in England, Scotland and Wales from April, with a “typical” energy bill falling by £238 per year, though areas with higher average use such as the Northern Isles are likely to see larger changes.

Electricity prices in Northern Scotland will be capped at 24.96 pence per KWh, down from 28.48 pence per KWh currently, though standing charges (which make up a small but fixed fraction of energy costs regardless of use) will rise slightly, from 59.38 pence per day to 61.10 pence per day. The Ofgem cap is based on a "typical household" using 11,500 kWh of gas and 2,700 kWh of electricity a year and paying by direct debit.

Commenting on the price cap drop, Mr Carmichael said:

“Any drop in energy prices is a positive for hard-pressed families in the isles. It has been a pretty turbulent winter even by isles standards and so lower costs will be a partial respite.

“Even so the joke that is the price “cap” gets less amusing every time it is revised. Sooner or later the government is going to have to think about proper reform of the energy market, with accountability and transparency, and – finally – a model that works for areas with the worst fuel poverty. A one-size-fits-all model simply does not fit the needs of the isles.

“I am disappointed too that while the overall cost of energy is down, standing charges are set to rise again. Even if standing charges are only a small proportion of energy bills they represent an outdated form of charging for energy which does not reflect the reality of modern electricity generation. Even Ofgem themselves have said they should be looked at. It is past time that they were replaced.

“As always, anyone in the isles in need of help with energy bills, accessing support payments or dealing with their supplier can contact my office for support.”