Introduction

Official statistics for fuel poverty in Scotland are produced annually through the Scottish Household Condition Survey. However, since the survey is carried out on an annual basis, and due to high energy prices, there is interest in how changes to Ofgem energy price caps for gas and electricity have affected the fuel poverty rate in between the surveys. To ascertain this, scenario modelling was undertaken using the achieved sample from the 2023 Scottish House Condition Survey (SHCS) to model fuel poverty rates under the Ofgem energy price cap.

The Ofgem energy price cap sets the maximum unit price per kWh and the maximum daily standing charge energy suppliers can charge consumers for gas and electricity[1]. This varies by energy supply region, payment method and type of electric meter (e.g. standard or economy 7)[2]. Table 1 shows how GB averages of these have varied over time.

Table 1: Maximum unit prices and standing charges under the Ofgem energy price cap for a household paying by direct debit (GB average)

Note: The weighted average prices for 2022 and 2023 reflect rates paid by households under the Energy Price Guarantee (EPG) and not the price cap at the time.

Although prices are set at the unit and standing rate level the price cap is communicated to consumers through Typical Domestic Consumption Values (TDCVs)[3]. Table 2 shows the TDCVs for previous price cap periods, however, Ofgem introduced new TDCVs from October 2023, on which the headline price caps are now reported.

Therefore, for clarity Table 2 shows actual Ofgem energy price cap (bolded entries), along with equivalent price caps based on the old and new TDCVs.

Table 2: Actual Ofgem’s energy price cap (bolded entries) and equivalents based on old and new TDCVs GB average [4]

The measurement of fuel poverty includes calculating the amount of energy that households require to heat their homes to meet the heating regimes set out in the fuel poverty legislation. Therefore, this will largely not be affected by changes in Ofgem TDCVs, as the fuel poverty definition is based on how much energy is required and not on how much is used.