Carmichael calls for geographic tariff as Ofgem cuts energy price cap

25 Aug 2023

Orkney and Shetland MP, Alistair Carmichael, has today noted Ofgem’s announcement of a cut to the energy price cap, and called for the regulator to begin looking at geographically differentiated tariffs.

Energy regulator Ofgem today announced a reduction in the energy price cap for the last quarter of 2023. From 1 October – 31 December, the cap will be set at an annual level of £1,923 for a dual fuel household paying by direct debit based on the current typical domestic consumption values (TDCV) rate – though households with higher usage such as those in the isles are likely to pay more. This would save households an average of £151 on the previous quarter.

Mr Carmichael said:

“While any drop in the energy price cap is welcome, the last year of rocketing prices makes calling it a “cap” a joke in poor taste. We all know that the energy market is not fit for purpose, either for families’ bills or for our wider need to improve energy efficiency and generate more renewables. Until we take a grip of that seriously then price cap changes are just tinkering at the edges.

“All that is without mentioning that price cap averages mean little to people in the isles with far higher energy requirements than the regulator’s “average”. Whether it is differentiated tariffs for areas with higher fuel poverty or outright decentralisation of the system, Ofgem needs to recognise that one-size-fits-all does not fit the isles.”

Mr Carmichael added:

“Now is the time to bring back social tariffs for energy. More to the point, the acceptance of the need of a social tariff by Ofgem surely opens the door to a geographical tariff – like an islands tariff of the sort we have been calling for here, which would take into account not just income but the reality of our climate.”