Surprise! Bet you weren’t expecting Ofgem’s energy price cap to rise, again! Or perhaps you didn’t take Ed Miliband’s word for it when he said that energy prices would fall by £300 under a Labour government. This week, Ofgem announced a 4% increase in its price cap. Again. It’s okay though, because the Secretary of State for Energy Security and Net Zero, Miatta Fahnbulleh, says that tackling the problem of rising energy prices is her “number one priority”. But what is the reality that the Labour Government and its false promises seem to be completely divorced from?
From October, the cap on a typical dual-fuel bill paid by Direct Debit will rise “from £1,663 to £1,723”, states Ofgem. When Labour won the 2024 General Election, the cap was £1,568. The cap rose in seven out of the nine quarters since then. But even these figures may be misleading.
Ofgem isn’t helping. Not helping us, anyway. It is helping the Government hide its policy failure. Those with sharper memories will recall that the quarterly cap set in July was higher – at £1,862, not £1,663 as is now claimed. The lower figure is the result of fairly typical quango goalpost moving. Ofgem has decided that household energy consumption has fallen, so it has adjusted its estimates of Typical Domestic Consumption Values (TDCVs). The old TDVC assumed that the average home used 2,700 kWh of electricity a year, but now consumes £2,500. For gas, it assumed 11,500 kWh, which is now 9,500 kWh. It is an especially stupid change, because there never was such a thing as an average house – it was always an approximate metric that allowed comparison. Moreover, one reason why consumption might be falling is that households are increasingly struggling. Here is the price cap, assuming the same level of TDCVs since Labour took power.
Using the consistent TDVC assumptions, the price cap from October until December will be £1,935. This means that the cap has risen £367 since the Government that promised to lower bills by £300 won the election.
