Russell Dean, Residential Heat Pump Expert at Mitsubishi Electric, has provided commentary to the Ofgem energy price cap, announced today.
He discusses how the Ofgem price cap rise is effectively wiping out the VAT relief, why Middle East instability strengthens the case for decoupling electricity prices from gas and why growing demand for cooling is making electricity affordability a year-round issue.
He comments: “Prime Minister Burnham’s announcement on the temporary removal of VAT on household electricity bills in July was important, but it has not proved enough to offset the energy price cap announced by Ofgem today (26 August).
The increase in energy prices, due to higher wholesale oil and gas prices because of the war in the middle east, will not be welcomed by UK households.
The government is correctly focusing on tackling the cost-of-living crisis. And while the VAT cut cushions electricity bills, the continued dependence of the price of electricity on the cost of gas undermines crucial price relief policies.
To reduce electricity bills, for both households and businesses in the long term, the UK government should be looking at policies that decrease the difference between electricity and gas and prices.
As long as electricity remains three to four times more expensive per kilowatt hour than gas, renewable alternatives like heat pumps remain unaffordable for many.
Policies that help to bridge the ‘Spark Gap’ will do more than anything to improve confidence in making the switch from gas, support the UK’s move to energy independence and provide us with energy security.”
