Carmichael calls for geographic tariff as Ofgem cuts energy price cap

NORTHERN Isles MP Alistair Carmichael has called on the energy regulator Ofgem to consider introducing geographically differentiated tariffs as one way of helping to reduce islanders’ high energy bills.

His comments come on the same day the regulator reduced the so-called price cap for the last quarter of 2023 to £1,923, meaning that, on average, dual fuel households bills in the UK should be lower than last winter.

However, household are likely to see little difference in what they pay for their energy as the £400 of government support given to all homes last winter is no longer available.

Orkney and Shetland MP Alistair Carmichael.

Orkney and Shetland MP Alistair Carmichael.

Households in the Carmichael’s islands constituency are also almost certain to pay more than what the price cap suggests due to higher usage.

The Orkney and Shetland MP described the energy market as it currently operates as not fit for purpose and price caps were nothing else that tinkering at the edges.

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“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,” he said.

“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.”

“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.”