Ofgem warned of Scots-backed court action over today's price cap hike

And Ofgem has now been warned that the action will begin if it does goes ahead with 80% fuel bill hikes as expected today (Friday) without trying to "cushion the blow".

It comes as new concerns are raised people's disposable incomes shrink significantly in the new year with some seeing the cost of their utility bills catching up with, or overtaking, their mortgage.

Energy prices could spike at as much as £6,823 per year for the average household from next April, according to the latest forecast by energy consultancy Auxilion, which amounts to about £569 a month.

Homeowners with fixed-rate mortgages pay £741 a month on average, according to the latest data from trade body UK Finance, compiled in December.

The Scots-backed judicial review plan to attempt to stop Ofgem rises from being implemented argues they should be bloced because there has been no impact assessments had been carried out.

Scotland's children's commissioner has recorded an interest in the potential legal proceedings against Ofgem to block the imposing of "unlawful" fuel bill hikes which it is feared will cost lives.

Commissioner Bruce Adamson has warned the market regulator Ofgem that a planned 80% October bills price cap rise from £1971 to what most analysts estimate will be around £3600 could hit a wide range of children's legal rights.

Yesterday 10 protesters 'occupied' the third floor of Ofgem's Glasgow offices for 40 minutes to protest over the impending energy prices and calling for a bills freeze.

That came as the largest producer of oil and gas in the UK’s North Sea saw its profit increase more than twelvefold in the first six months of the year as record gas prices were set to plunge millions of households in the UK into fuel poverty.

Harbour Energy said it had made 1.5 billion dollars (£1.3 billion) in profit before tax in the six months to the end of June.

A formal pre-action letter has been sent to Ofgem in the Scots' backed action warning that it has a duty to protect at-risk groups from rising energy costs in advance of the planned increase.

It claims that Ofgem stands to fail in its legal duty to protect consumers, particularly those who are vulnerable and also communities that have no access to cheaper gas.

Mr Adamson has echoed the groups' call to Ofgem that in line with its regulatory duties, it should show how it has considered the impact that raising the price cap will have before setting it, particularly on vulnerable groups of children and young people.

The Good Law Project said Ofgem had failed to produce evidence of any assessment each time they have asked.

And it said that unless Ofgem shows on Friday that it has taken "real action" to cushion the blow of the any bill increases "we will sue".

The children's commissioner also questioned Ofgem's decision to raise the energy price cap without properly considering the impact on children in Scotland, warning more families will be pushed into poverty this winter.

And he indicated it could affect three sections of the European Convention of Human Rights (ECHR) including the rights to non-discrimination, to protection from inhuman or degrading treatment and to the respect for private and family life.

It will also hit nine sections of the the UN Convention on the Rights of the Child (UNCRC) including the right to have their best interests prioritised in all decisions affecting them and the right to an adequate standard of living.

He also said that in extreme cases the decision "may engage the right to life, particularly of disabled children and young people", in the ECHR and the UNCRC.

In his letter to the energy regulator’s chief executive, Jonathan Brearley, the Commissioner expresses his grave concerns about the impact of a price cap rise on children in Scotland, and his particular concern for families with disabled children, some of whom rely on life-saving electrical equipment.

“Experiencing poverty can severely affect a child’s development and have a negative impact on their human rights to mental and physical health, education, family relationships, standard of living, aspirations and life chances – both in childhood and adult life.”

He continues: “Children have told us that they feel poverty robs them of their childhood, but this is not inevitable. Poverty is a political choice; a consequence of decisions made by the UK and Scottish Governments. Regulators and others who hold economic levers can choose to either mitigate or contribute to poverty.”

The Commissioner is asking Ofgem – in line with its regulatory duties – to demonstrate how it has considered the impact that raising the price cap will have, particularly on vulnerable groups of children and young people.

He said Ofgem has previously failed to produce this evidence when asked by others and has recently been put on notice of court action by campaigners should it not comply with its legal duties to protect vulnerable consumers.

He said that when making decisions about the energy price cap and its other regulatory functions Ofgem has a duty to conduct impact assessments and consider the needs of vulnerable groups, particularly disabled or chronically sick people, those on low incomes, people living in rural areas, and pensioners.

In his letter Mr Adamson states: “It is clear that many children and young people in Scotland will fall directly within the first three of those categories and that a significant number of individuals in all four categories will have child dependents.”

The Commissioner also points out that Scotland has a disproportionate number of households without access to mains gas, particularly in rural and island areas, whose costs are not fully protected by the price cap. In some cases, the increased costs they face are well in excess of the price cap, particularly those on all electric heating systems.

The Commissioner has asked Ofgem to explain how it intends to use its powers to protect children and young people from the impact of a rise in the price cap. He warns more children will experience poverty, and more will face severe poverty, as a result of the regulator’s price cap decision.

Mr Adamson said: “It is beyond dispute that unfettered and unmitigated energy price rises risk pushing more children into poverty, and those children already in poverty into destitution. The short and long-term consequences to individuals and to society will be devastating.”

An Ofgem spokesman said: “We know that people are currently under huge pressure as bills continue to rise and we will keep working closely with the Government, consumer groups and with energy companies on what further support can be provided to help consumers with these higher prices.

"We can confirm that Ofgem has received a letter from the Children’s Commissioner Bruce Adamson, and we will reply in due course."