A reduced price cap will still leave many with unaffordable bills. However, a more equitable option has been discreetly abandoned.

Former Labour leader Ed Miliband planted the seeds for the energy price cap nearly a decade ago, promising to defend households from unfair tariffs by capping their energy bills. 

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On Friday, the industry regulator Ofgem will establish its new limit on how much gas and electricity suppliers can charge per unit. Analysts at Cornwall Insight anticipate that it will reduce the annual energy price limit for the average household from £2,074 to £1,823, which would be the lowest level since Russia’s invasion of Ukraine.

However, according to fuel poverty activists, homeowners should not expect to feel better. This winter, the price ceiling will remain nearly twice as high as before the conflict sparked a global energy crisis.

This is because the measure was intended to reflect the underlying cost of supplying households with gas and electricity, and as these costs increase, so does the limit. Households are assured that the quantities they are being asked to pay are reasonable, but for those who are struggling, this is cold comfort.

More than 6 million households are fuel-poor and unable to pay their bills; millions more are anticipated to experience financial hardship as energy costs continue to fuel economic inflation. 

Many question whether a price ceiling is the best instrument for a struggling market.

The chief executive officer of Ofgem has urged ministers to consider whether this “very broad and crude” price control should be substituted with “a more rigorous framework of customer support.”

In the meantime, voices from across the energy industry are urging the government to establish a “social energy tariff” that provides vulnerable households with bill discounts.

Nearly one hundred charities and non-profit organisations have written to ministers imploring them to swiftly incorporate the idea into law. The proposals also enjoy industry support. Unlike the price limit, this measure could go beyond ensuring that bills are “fair” by also ensuring that they are affordable for the most vulnerable members of society.

Ministers appeared to be listening until recently. Jeremy Hunt pledged that the government would “develop a new way to consumer protection in energy markets” by collaborating with consumer groups and industry “to consider the best approach, with options such as social tariffs.”

Others in Rishi Sunak’s cabinet, including the prime minister, provided repeated assurances that a social tariff would be considered part of the government’s broader retail market reforms. 

However, all references to one had vanished when the consultations were released last month.

The End Fuel Poverty Coalition coordinator, Simon Francis, fears that the government has abandoned its commitments. In a letter to parliamentarians seen by the Observer, he urges MPs to exert pressure on the secretary of state to contemplate a social tariff.

“This is particularly important for the elderly, the disabled, those with health conditions, families with young children, unpaid carers, those with lower incomes, and fuel-poor households,” said Francis.

The uncertainty surrounding a social tariff is at the core of the government’s failure to assist many of the most disadvantaged members of society. 

This winter, billpayers who receive means-tested benefits will be eligible for £900 in additional assistance with their energy bills, in addition to £300 for senior citizens and £150 for people with disabilities. However, millions more are anticipated to fall through the cracks.

According to a study by researchers at the University of York, an estimated 1.7 million fuel-poor households could be left without assistance because they do not receive benefits. 

Approximately 700,000 of these are families with children.

The government has responded by stating that the outlook for energy prices has considerably improved and will continue to monitor the situation while considering all options, including those for the most vulnerable households.

This week, with the price cap set to provide very limited relief, these households will be left with a dilemma ministers appear determined to ignore: Is an unaffordable energy bill ever truly justifiable?