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Big rise in UK energy bills likely this spring

Eleanor Newis
Jan 11, 2019

Government price cap won’t keep energy costs down.

Millions of consumers across the UK will face a big rise in their energy bills after April 2019, when an increase in the new price cap is likely to take effect. This comes as a warning from Ofgem, the energy regulator.

Approximately 11 million homes in the UK who are on default tariffs (usually the most expensive) saw their bills capped from 1st January. This resulted in an average saving of £76.

The chief executive of Ofgem, Dermot Nolan, said that customers will have to be ready to pay much more in future when the cap is changed in February. The change will take effect in April and will see the cap rise to reflect wholesale energy costs.

Dermot Nolan said: ‘Wholesale costs have risen significantly over the past year. As a result it is likely we will announce an increase, potentially a significant one, on the level of the cap.’

However, he did say that he wanted customers to be reassured that the increase would only reflect ‘the actual costs of supplying energy’ and not just gain extra money for energy firms.

Some analysts have suggested that there could be a rise in customers’ bills as high as £100. However, the energy minister Claire Perry said the Government had not misled customers by telling them they would make savings.

She said: ‘We do think energy prices will continue to move, to go up or down.’ But she maintained that consumers would be better off with the cap than without it. 

Ofgem will review the price cap twice each year, in February and August. They will adjust the cap to reflect the costs that are facing suppliers.

The minister did also say that she was concerned about the costs facing all consumers due to the ‘striking’ number of energy suppliers that have been collapsing.

Perry said that the Government and Ofgem were monitoring the situation. 

The minister rejected the notion though that the price cap is to blame for so many suppliers going bust. She said: ‘There is no correlation between supplier failures and the price cap, and when people conflate those two things I find it a little alarming.’

The new chairman of Ofgem, Martin Cave, said that whilst new entrants to the market are good for competition, there have recently been some downsides:

‘Arguably too many suppliers have come into the market with unsustainable business models. This can manifest itself in shoddy customer service, triggering more enforcement action of Ofgem against the worst offenders.’

Many have called for Ofgem to bring in more regulation to stop newcomers entering the market who are not financially stable enough. 

In the meantime, it is important to make sure you pick the right energy supplier and the right tariff for your home. Use a price comparison tool like A Spokesman Said to read up on all the available deals, and choose the right one for you. This could save you more money than relying on the price cap.


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