Energy bills could rise by £100 each year
Energy bills might be set to rise up to £100 each year as regulators are expected to unveil a significant hike to the price cap that has recently been put on default gas and electricity tariffs. This comes only weeks after the tariff has been introduced.
Earlier this month, the energy regulator Ofgem introduced a cap on the prices of energy bills for those who are on standard variable tariffs (SVTs) which customers are automatically moved to when their deals finish.
This intervention into the industry was ordered by Theresa May, in order to protect vulnerable customers who don’t shop around for deals as much. They are then ‘ripped off’ as a result, according to the Prime Minister.
Ofgem said that the price cap would save 11 million loyal customers an average of £76 each when it was launched. The cap is set at £1,136 per year for a typical dual fuel customer who pays by direct debit.
However, analysts now expect that the cap will be increased by Ofgem by as much as £100 only weeks after it was first introduced. Ofgem is revising the cap and it might wipe out all the savings that households have managed to make.
Ofgem is planning to revise the cap every six months to take into account any changes in wholesale prices and fluctuations in the market. The first revision date is 7th February.
Some are saying that Ofgem was under pressure to present the price cap with a number that was acceptable politically and gave consumers a sense of security. However, this number is now likely to be altered quite a lot.
The chief executive at Ofgem spoke at a conference a few weeks ago and stated:
‘While I cannot say today exactly what it will be, wholesale costs have risen significantly over the last year. As a result, it is likely that we all announced an increase - and potentially a significant one - in the level of the cap.
‘Even if this is the case - and obviously I hope that any increase can be ameliorated and as minor as possible, but ultimately I can’t guarantee that as we committed to passing through efficient costs - customers can still be confident that any increase in the cap will only reflect changes in the actual costs of providing the gas and electricity use - and that they will always pay, as a result, a fair price for their energy.’
Ofgem will make an announcement on 7th February about how much they are going to alter the price cap, and then the price rise will come into affect on the 1st April. A rise of £100 would be the biggest price increase for energy that customers have ever experienced in a single day.
To protect yourself against some price fluctuation, it’s best not to rely on the price cap. Instead, you should choose an energy tariff that suits your home and your budget. Use a price comparison website like A Spokesman Said to find out how you can save money on your energy bills and avoid the stress of waiting for the price cap announcement.
Here at A Spokesman Said we love fighting for your rights and believe passionately in natural justice.
But these battles cost us money. You could help us fund these fights by using our price comparison site, A Spokesman Said for your energy, car insurance and household bills.
We’re just the same as Go Compare or any other price comparison site, so you won’t be losing out in any way - by helping us, you will be helping yourself.
Thank you for your support.
Are you paying too much for your energy bills?
We compare prices from the Big 6 and many other energy suppliers, getting you the very best price.