Written Statement: Fuel Poverty

Yesterday, I met Ofgem officials to discuss the next domestic energy price cap which will come into place on 1 April. This announcement confirms that the price cap for 1 April to 30 June 2026 will be set at £1,641, representing a 7%, or £117 reduction from the current level of £1,758.

A price cap decrease in April will be a welcome relief to many households across Wales who have struggled to meet essential costs since the energy crisis hit in 2022, particularly the estimated 340,000 households (25%) living in in fuel poverty. Energy suppliers must continue to do all they can to support their customers with fair and affordable payment plans and emergency support where required. This is something I will raise with energy suppliers when I meet them on 12 March. 

The primary factor driving the reduction in the price cap is the change to policy costs announced by the UK Government’s Chancellor of the Exchequer in last year’s autumn Budget. This included the closure of the Energy Company Obligation and the Great British Insulation Scheme, and the movement into general taxation of other policy costs, which together reduce average household bills by around £150. Other factors include a decrease in the unit rate and a small reduction in the standing charge. Recent falls in wholesale energy prices have added further downward pressure. At the same time, increased investment in the energy network continues to support a resilient and sustainable system for the future.

Ofgem are reporting that 38% of customers are on fixed tariffs, which is roughly the same figure as pre 2022. They are encouraging customers to shop around and consider whether fixing with their existing supplier or switching could save them money. Last year, customers on a fixed tariff paid around £115 less on average compared to those on variable tariffs.  

Standing charges are a concern for many households across Wales and I welcome confirmation from Ofgem that a pilot for lower standing charge tariffs will start this spring to bring greater choice for consumers, particularly low energy users. I have regularly called on Ofgem to view the impact on standing charges through the lens of vulnerable people. Suppliers need to be more engaged and switch vulnerable households to more favourable tariffs automatically. I will continue to make this case and call for a social tariff.

I recognise the difficulties households across Wales face, many of whom are already struggling to meet essential costs, and the Welsh Government’s Discretionary Assistance Fund continues to provide emergency funding for vulnerable people who find themselves in financial crisis. 

The Welsh Government are committed to ensuring that people in Wales claim every pound they are entitled to. We have a well-established stakeholder group to drive forward this work and our benefit take-up campaign is delivering results and awareness of financial support in Wales. We are encouraging people to contact Claim What’s Yours helpline to find out about the financial support they may be entitled to.

We are also investing over £120 million this year into retrofitting the homes of low income households through our Warm Homes Nest scheme and Optimised Retrofit Programme. Our free expert energy advice is available to all householders in Wales via the Nest helpline, to provide hints and tips to keep on top of energy bills and check for eligibility for free energy efficiency measures through the Nest scheme.