Ofgem must take some of the blame for spiralling energy costs, says Baroness Anne McIntosh

“It’s unsustainable,” she said. “Particularly when the process of milking cows and feeding pigs is now all automated. Their costs have gone through the roof.”

The National Farmers’ Union has warned that food supplies could be affected, if the Government does not step in to help farmers with soaring energy costs and labour shortages. It said one vegtable grower in Scotland could see his annual bill rise from £140,000 to over £800,000.

The energy regulator Ofgem sparked a furious backlash yesterday (Aug 26), when it raised the price cap. The move means the average bill will rise by more than 80 per cent, to £3,549 a year.

A spike in wholesale gas prices has been exacerbated by the war in Ukraine and Ofgem claims that more energy suppliers in the UK will fail if they cannot pass on some of the cost to their customers.

It comes after the regulator announced in June that bill payers had already picked up a £2.7bn bill for transferring customers of the 28 suppliers which failed following a sixfold rise in gas prices in 2021. That equates to around £94 per customer.

However, Baroness Anne McIntosh, who has led debates on the energy crisis in the House of Lords, insists the regulator must accept some of the blame. She said it was “asleep at the wheel” and failed to do its due diligence and ensure those companies were stable enough to survive a gas price spike.

“Now we’re all paying the price that’s being passed on – by being added to the standing charge of our bills – for those companies that have failed,” she said. “Why are the energy companies not taking the cost of their profits? This energy emergency is only going to be a temporary situation, one would hope, so they could have taken temporary measures rather than passing it directly on to the consumer.”

The former Conservative MP also believes the regulator appears to be more interested in protecting the remaining energy companies, than ensuring households and businesses can afford to keep the lights on.

National Energy Action, which she chairs, has found around one in four UK households (6.5m) are in fuel poverty and that figure is expected to rise in the coming months.

And NHS leaders are concerned that widespread fuel poverty will increase the high number of annual deaths associated with cold homes and add pressure to an already overwhelmed health service.

“Ofgem’s role is to protect the consumer against these giant energy companies, which now are much more powerful because there’s fewer of them,” said Baroness McIntosh. “The Government needs to look very closely at their role as an independent regulator, as they seem to be much more heavily in favour of the energy suppliers.”

The Conservative peer believes the Government must also now look at passing some of the rising energy costs onto high-earners, by asking them to pay more in taxes, rather than inflating everybody’s bills.

“What that would mean is that those who pay higher rate taxes will pick up the costs,” she said. “But we also have to look at how oil and gas companies are earning a tremendous amount of profit, at a time when everyone is struggling to pay their heating and electricity bills.”

BP recently announced a quarterly profit of £6.9bn – it’s biggest for 14 years – while British Gas owner Centrica half-year profits of £1.34bn were five times higher than a year earlier. The Government has promised £37bn of support to help people cope with rising energy costs this winter, which includes a £400 payment for every household and another £650 for low-income households.

And earlier this year, it imposed a 25 per cent windfall tax on oil and gas profits made in the UK, to raise £5bn for that support package, but then handed those companies tax cuts to promote further oil and gas exploration.

The Government has also introduced the Energy Bill, which aims to make the UK’s energy network more reliable and resilient and reduce the nation’s reliance on fossil fuels while minimising the cost passed onto consumers.

Baroness McIntosh will be scrutinising the bill alongside her fellow peers in September and she hopes it will ensure the UK is not “caught out” by another spike in wholesale energy prices.

She said the UK only had the capacity to store enough gas to last around 60 days, following Centrica’s closure of the Rough storage facility in the North Sea, and the Government needs to look at increasing that capacity urgently.

However, the company is planning to reopen the facility, which once held around 75 per cent of the country’s gas reserves, in the coming months.

According to Baroness McIntosh, a former MP who represented the Vale of York and then Thirsk and Malton between 1997 and 2015, North Yorkshire should also be looking to build a its own energy supplies.

Instead of paying to ship waste to country’s like Holland, it can be sent to facilities like Allerton Waste Recovery Park in Knaresborough and turned into biogas that generates renewable electricity, she said.

“That would be a quick fix,” she added. “We’re actually paying to export it, so let’s use it locally instead. And rather than put the energy that’s created into the National Grid, which is what’s happening at the moment, let’s keep it locally for places like Harrogate, knaresborough and North Yorkshire generally, so that all local residents get the benefit.

“It just seems insane to me, when we are one of the coldest parts of the country when it comes to the winter months, that we’re not using it ourselves.”