Consumer champion Martin Lewis warns "lives will be lost this winter" due to high energy bill prices.
The MoneySavingExpert founder told BBC Radio 4's Today programme that the 80% increase in the price of energy is a “genuine social and financial catastrophe that is putting lives at risk”, adding: “I’ve been accused of catastrophising over this situation.
“Well, the reason I have catastrophised is this is a catastrophe, plain and simple. If we do not get further Government intervention on top of what was announced in May, lives will be lost this winter.”
Read more: Energy bills to soar as Ofgem confirms price cap will rise to £3,549
The average household’s yearly bill will go from £1,971 to £3,549 from October. Many customers will have to pay more, and the charges are higher for those who pay as you go or use cash or cheques to pay their bills on receipt every three months.
Martin added: “You could easily be paying £5,000 or £10,000 a year if you have high usage.
“I worry terribly for some of those who have disabled children or disabilities themselves who need lots of electrical equipment to keep their houses warm because of medical conditions.”
Ofgem - who set the cap - has called for Government intervention as its chief executive labelled the increased price cap as "devastating" for families. At which point you may ask, why doesn't Ofgem just set a lower energy cap?
Who are Ofgem and what do they do?
Ofgem is Britain's energy regulator.
Gov.uk explains: "It takes decisions on price controls and enforcement, acting in the interests of consumers and helping the industries to achieve environmental improvements."
Among Ofgem's roles is ensuring customers get fair treatment and enabling competition to bring prices down.
Ofgem says: "We regulate only where necessary to protect consumers’ interests and we carefully consider whether any regulatory requirement we propose is proportionate. We carry out investigations into company behaviour when we believe they may have breached a condition of their licence, or the requirements of consumer protection, or competition legislation."
So why doesn't Ofgem just lower the energy cap?
Ofgem says it can't, as lowering the energy cap at this time would mean gas and electric companies can not afford to pay for energy to sell to customers.
Ofgem chief executive Jonathan Brearley said the gas price this winter was 15 times more than the cost two years ago. The high costs make lowering the cap impossible, he said.
He told BBC Breakfast: “When I look at what… gas now costs this winter, it is 15 times the normal price that we were expected to pay two years ago. Now if that were happening in petrol, it would cost us £400 to £500 just to fill up our car. So because those costs are changing, the price needs to change and that’s why the price cap is now changing to £3,549”.
When asked why Ofgem was not protecting the consumer by having a lower price cap, he said: “The reason we don’t have a lower price cap is because if the companies cannot recover the amount of money it costs for them to buy the energy, then ultimately, they will be unable to function.”
“They would have been unable to give us the energy that we need. So what the price cap does, and this is really important, it stops those companies charging excess profits over and above the cost of energy.
“But what it can not do is set a price that is less than the cost of the energy that we buy, and that’s why we have to make the change that we are making today.”
He added: “The price cap was never there to say that we can somehow subsidise energy or reduce energy below the cost of which companies have to pay to buy. So yes, it does need external influence – it needs Government, the regulator, the industry and NGOs all to work together to find a solution to this,” he told BBC Radio 4’s Today programme.
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