Scottish housing associations challenge legality of soaring power bills
A group of Scottish housing associations has put Ofgem on notice of court action if it fails to comply with its legal duty to protect vulnerable customers amidst soaring energy prices.
The Highlands and Islands Housing Associations Affordable Warmth Group has teamed up with the Good Law Project and Fuel Poverty Action to raise concerns the energy regulator is unlawfully failing to take measures to protect the near 35 million people who are under threat of fuel poverty in the coming months.
Ofgem sets the level at which the cost of energy is capped. When it does this, it has a duty to protect consumers, particularly those who are vulnerable.
In analysis prepared by the Good Law Project, that means it has to conduct a proper impact assessment before implementing changes to the price cap. Having done so, it has the power to ease the pressure of mounting bills on vulnerable consumers who are likely to be most affected by imposing a separate, lower cap for them, sometimes called a ‘social tariff’.
But, on 26 August, Ofgem is set to announce yet another energy price cap hike, which will come into effect on 1 October. This will raise the average household bill to a predicted £3,582, marking a 180% increase from this time last year. In doing so, the organisations bringing the case said Ofgem has “barely considered the impact its decision will have, let alone any steps it could take to mitigate it”.
In July, the Good Law Project wrote to Ofgem, expressing its concerns about its decision-making and asked for proof of its impact assessments. The Project said the three-line reply it received “did nothing to ease our concerns”.
Now, along with Fuel Poverty Action and Di Alexander, the chair of the Highlands & Islands Housing Associations Affordable Warmth Group, it has written to Ofgem demanding it does more to protect vulnerable people and off-grid communities.
The organisations are now calling on Ofgem to commit to carrying out proper impact assessments, and to consider appropriate mitigation measures, before raising the energy price cap any further.
The pre-action warns: “It is unlawful for a public authority to act in a way that is incompatible with the ECHR.
“Given the potential impact that Ofgem’s decision will have on the human rights of vulnerable households across the UK, Article 8 of ECHR is engaged. Should Ofgem fail to take reasonable steps to safeguard the rights of individuals, it could be at risk of violating Articles 8 and 14 of the ECHR on the basis that such a significant increase to the energy price cap is likely to render some individuals destitute, rendering them homeless and/or forcing them to have to choose between heating their accommodation and feeding their family or other essential household expenditure.”
The groups say there should be a discounted social tariff for vulnerable groups to ease the price hikes for those in need and a failure to give a reasoned consideration over that prior to raising the energy bills cap next week “would likely be unlawful”.
Di Alexander, chair of the Highlands & Islands Housing Associations Affordable Warmth Group, said: “This is an urgent wake-up call for Ofgem who are clearly failing in their self-proclaimed ‘duty to ensure fair treatment for all consumers, especially the vulnerable’. Why is Ofgem discriminating so unfairly between off-gas and dual-fuel households?
“Gas costs 7p a unit and electricity 28p a unit, but 15% of all UK consumers can’t get mains gas and can’t escape having to pay so much more than even their hard-pressed dual-fuel counterparts for exactly the same level of energy consumption. It’s manifestly unfair and it’s the vulnerable who bear the brunt. That’s why they at least need the protection of a manageable ‘social tariff’, set at the same price per unit for both gas and electricity.”
A spokesperson for Fuel Poverty Action added: “Ofgem are failing in their duty to protect those most vulnerable in our societies from the horrors of living in fuel poverty. The price cap is one aspect of a failing energy system that is no longer fit for purpose and its meteoric rise is pushing millions into fuel poverty. Ofgem must stop acting in the interest of the energy suppliers and the fossil fuel industry, and begin to understand the life-threatening conditions they are imposing on people this winter.”