Last week, Ofgem announced that the Energy Price Cap would be lowered. From July, average bill payers will see “a decrease of 7% compared to the cap set between April 1st to June 30th, 2025”. The likes of Ed Miliband were quick to capture the good news by reaffirming the Government’s commitment to the 2050 Net Zero and 2030 Clean Power agendas. But a closer look at the detail of the price cut and other news shows just how fragile those agendas really are.
The news that there would be a price cut was not unexpected. Energy price caps are announced quarterly. As reported here, the Spring (April-June) price cap rise was announced in February – the third since the Labour Government was elected in July last year on the promise of “lower bills”. “Energy bills are set to rise again due to a spike in global gas markets,” claimed Ed Miliband ahead of Ofgem’s February rise. But there is no such thing as “global gas markets”. And that “spike” had already passed.
A post-pandemic low price of gas on UK markets had occurred in February 2024 at around 56p per therm (29.3 kWh). But over the next year, this price increased to 142p, peaking on February 11th. On February 25th, Ofgem announced a 6.4% price cap increase for the second quarter of this year. But by the time of Ofgem’s announcement, a mere fortnight later, the price had fallen to 106p – a fall of 25%. Into the second quarter, the price fell further, reaching a low of 69p – or less than half of February’s spike price – on April 7th. The price then stabilised at around 83p (around 42% of the peak price).
“It’s great news the energy price cap is going down, but we have more to do”, tweeted Ed Milband in response to last week’s announcement from Ofgem – as if he and his policies had caused the price drop. “Our clean power mission is the route to long-term energy security and lower bills,” he added. Odd, isn’t it, that a 6.4% increase in the cap was blamed on (non-existent) “global gas markets”, but that a 7% drop in the cap, following a 42% reduction in UK gas prices, is not blamed on the same outside forces, but is instead given as cause to double down on the green agenda.
The clues are there for those whose capacity for simple maths is not hindered by green ideology… a 42% reduction in UK gas prices yielded only a 7% drop in the energy price cap. But doesn’t Miliband tell us that “global gas prices” are the cause of all our problems?
And not just Milband. In the Times, the Green Blob’s favourite du jour talking point is reproduced uncritically by the newspaper’s Energy Editor, Emily Gosden. “Unlinking electricity prices from gas ‘would cut energy bills’,” claims the headline. According to this meme, remastered by energy market consultant Adam Bell, formerly Head of Energy Strategy at BEIS and Senior Policy Advisor at DECC, the “link” between gas prices and electricity prices could be “cut”. According to the article, “Britain’s wholesale market operates on a system of ‘marginal pricing’ whereby the most expensive plant needed to keep the lights on determines the price all generators are paid”.
Hellbound and Down 