Ofgem to be sued over 'failures' with energy price cap to spike by 80 per cent

The price cap on energy bills will rise by 80 per cent, Ofgem has announced. Photo: PA
The price cap on energy bills will rise by 80 per cent, Ofgem has announced. Photo: PA

A COALITION of campaign groups, including one focused on the Scottish Highlands and Islands, has announced plans to sue Ofgem over the energy price cap rise.

On Friday, the UK energy regulator said that the energy price cap would go up by 80% from £1971 to £3549 from October 1. For people on prepayment meters – who tend to be some of the most vulnerable in society – the average spend will go up from £2017 to £3608.

The price cap is then expected to go up again from January 1 to more than £5300, according to money saving expert Martin Lewis.

READ MORE: Martin Lewis issues dire warning as Ofgem raises energy price cap by 80 per cent

The Highlands and Islands Affordable Homes Warmth Group, in conjunction with Good Law Project and Fuel Poverty Action, has announced plans to sue Ofgem over what they call a “failure to mitigate the impact of rising energy bills on consumers”.

Jo Maugham, the director of Good Law Project, said: “The announcement today will devastate families. Just who and what is Ofgem for? Do not be fooled. This is a choice. And the choice they’ve made is to let low-income consumers and small businesses bear the brunt of this crisis.

"We believe Ofgem can – and should – do more. We intend to put the question before the High Court, and will ask for a fast-tracked timeline to reflect the urgency of this crisis.”

The campaigners said they plan tol ask the High Court to ensure the regulator ”upholds its legal duties to, among other things, carry out an impact assessment before confirming the price cap increase, including assessing the disproportionate impact on elderly people, children and people with disabilities”.

Good Law Project argued that Ofgem is legally required to provide evidence it has carried out a proper impact assessment and consider appropriate mitigation measures for the most vulnerable before raising the price cap.

In July, the campaign group wrote to Ofgem asking it to provide proof of its impact assessments. It said the regulator failed to do so.

Ofgem’s chief executive Jonathan Brearley warned of the hardship energy prices will cause this winter and urged the incoming Prime Minister and new Cabinet “to provide an additional and urgent response to continued surging energy prices”.

The regulator said the increase reflected the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the Covid pandemic, and had been driven still higher to record levels by Russia slowly switching off gas supplies to Europe.

Chancellor Nadhim Zahawi said the increase in the energy price cap would cause “stress and anxiety” for people, but that the Government was working to develop more options to support households.

However, no immediate extra help will be announced by Boris Johnson’s Government, with major financial decisions being postponed until either Liz Truss or Rishi Sunak is in No 10 after the Tory leadership contest.

Ofgem has been approached for comment.