Energy price cap: Ofgem has assured Scottish Government no blackouts will happen this winter, according to Michael Matheson following price hike

No blackouts will take place in Scotland this winter as gas and electricity needs will be met, a key Scottish minister has claimed, based on assurances received from the UK’s energy regulator.

Energy secretary Michael Matheson said the Scottish Government has been given assurances there would be no blackouts this year as energy markets will be "similar to last winter”.

It comes as the boss of Scottish Power warned the 80 per cent rise in the energy price cap would be “truly catastrophic” for millions, while Nicola Sturgeon claimed the spike was is “simply unaffordable”.

The First Minister said the energy price cap rise must be cancelled, and Scottish Power chief executive Keith Anderson said only a big solution can “shelter people from the worst this winter”.

SNP Energy Secretary Michael Matheson said he has been given assurances from energy regulator Ofgem that no blackouts will take place this winter.

Ofgem has confirmed an 80 per cent rise in the cap, which will send the average household’s yearly bill from £1,971 to £3,549 from October – the highest on record.

The price of electricity will rise on average from 28p per kWh to 52p in October-December and gas will go up from 7p to 15p per kwh.

The revised price cap was confirmed as leading energy consultancy Auxilione delivered a grim forecast, warning the energy price cap could top £7,000 by April next year.

The prediction is based on the current cost of buying energy on global markets and also sees bills hitting £5,405 in January.

The cap will come into effect for about 24 million households in Scotland, England and Wales on default energy tariffs on October 1, and will remain in place until December 31, when it will be adjusted again.

Mr Matheson said he had a discussion with Ofgem international grid last week, with the regulator saying it was “confident” on the issue of energy supply after warnings the UK Government could face potential blackouts.

A ‘worst-case’ winter contingency plan drawn up by the UK Government has planned for the possibility of four days of power cuts and blackouts in January.

It is understood the scenario is being increasingly discussed in energy trading circles. The contingency plan could involve directing gas to where it is needed most, with the second phase stopping supplies to 'gas-fired power stations' and blackouts to households and industry.

During an event in Glasgow on Friday, Mr Matheson said: "The broad picture from the national grid is that they see the energy markets and this winter being similar to last winter where there is sufficient capacity in the whole of the UK around this issue.

"Everything we are being told by the national grid, we are not expecting that [blackouts] to happen. So they have given us confidence that won’t be the case and they have assured us they are continuing to review their own assessment of need this winter and the geopolitical impact it could have. They have given us the assurance that both the gas and electricity needs will be met this winter.”

Asked about support if a blackout does happen, Mr Matheson said: “This is an issue reserved to the UK Government, so anything around national contingency for a potential loss of energy output is led by them.”

Ofgem’s chief executive Jonathan Brearley warned of the hardship energy prices would cause this winter and urged the incoming prime minister and Cabinet “to provide an additional and urgent response to continued surging energy prices”.

The regulator said the increase reflected the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the Covid pandemic and had been driven even higher to record levels by Russia slowly switching off gas supplies to Europe.

Scottish Labour leader Anas Sarwar and Scottish Liberal Democrat leader Alex Cole-Hamilton called for energy prices to be frozen.

Mr Sarwar said: “This is a national emergency and our governments have a moral duty to act.”

Scottish Liberal Democrat leader Alex Cole-Hamilton MSP said: “This energy price rise will be devastating for hundreds of thousands of Scottish families and pensioners already struggling to make ends meet.”

Citizens Advice Scotland chief executive Derek Mitchell said: “This increase should not go ahead. It is absolutely horrifying for people who are hanging on by a thread financially.”

Chancellor Nadhim Zahawi suggested households needed to look at how they were using energy, but said the UK Government was working to develop more options to support households.

He said: “I know the energy price cap announcement this morning will cause stress and anxiety for many people, but help is coming with £400 off energy bills for all, the second instalment of a £650 payment for vulnerable households, and £300 for all pensioners.”

The Scottish Chambers of Commerce had pleaded for support for businesses in the build-up to the energy price cap announcement, calling on the Scottish Government to provide a relief package similar to that delivered during the Covid-19 pandemic, and to ensure the non-domestic rates (NDR) revaluation goes ahead as planned next year.

But Mr Matheson said Ofgem needed to intervene to help support SMEs and the energy costs they were facing.

He was unable to say whether or not the Scottish Government's commitment to ensure the NDR revaluation due to take place in 2023 would go ahead.

Mr Matheson said: "We are looking at an emergency budget review and that is one of the things being considered within that, but it doesn’t help businesses today.”

The minister and his colleague Shona Robison wrote to the UK Government at the start of this year asking for an urgent meeting on the energy crisis.

Mr Matheson said: "This crisis started prior to the illegal war in Ukraine. That has exacerbated the situation, but it started last year and we called for a four-nations approach that we’ve repeated and the UK Government still refuse to work on that basis. We’ve had a lack of action from the UK Government to do that.”

The energy minister also ruled out the use of new nuclear as he said it had the potential to drive up energy prices. He stressed it would take a significant amount of time to develop a nuclear power station, adding: "What we can do is ramp up at a quicker rate the role out of renewable energy, which is the cheapest form of electricity production you can get.”

To support this, the minister said the UK Government could address high transmission charges and provide a route for further hydro and pump storage schemes.