Energy costs surge for millions as price cap rises
More than half of the households in Britain will start paying more for their energy in April, after the regulator Ofgem raised the price cap today.
Ofgem sets the maximum prices that can be charged across the country for gas and electricity for those on standard variable tariffs (SVTs). These are people who have not switched suppliers and who have therefore been rolled on to default deals — which are usually the most expensive.
The regulator is raising the price cap in order to allow suppliers to cover their rising wholesale costs.
The chief executive of Ofgem, Dermot Nolan, said: ‘We can assure these customers that they remain protected from being overcharged for their energy and that these increases are only due to actual rises in energy costs, rather than excess charges from supplier profiteering.’
Around 11 million households in the UK are on these default tariffs and will be affected by the rise in the price cap. One of these households should now expect to pay approximately £1,254 each year.
Consumer groups say that people should shop around to get the best deals instead of remaining with the same supplier.
In addition, there are also four million people who are on pre-payment meters, who will also see their tariffs rise. A typical pre-payment customer will now pay £106 more than they did the year before.
One customer whose bill will go up spoke to the BBC. Jackie Foran, 65 from Manchester, ended up on a default tariff after her old energy firm went bust, and she pays around £100 despite living alone.
She said: ‘I think quite a lot of elderly people will be caught by surprise, because when somebody says [the price] is capped, you think you don’t have to do anything, you don’t have to worry, it will all be perfectly fine.
‘But you could still be on an expensive rate, even though it is capped. It could make a big difference to the bills. In my mind, they are not really capping it are they?’
The energy price cap is a flagship Government policy, designed to protect the vulnerable and those who have stayed with the same energy firm for a long time.
However, the price cap is now being raised due to the rising wholesale costs that energy companies face — the price of oil is getting higher and higher, and this accounts for more than a third of the typical UK energy bill.
To avoid this price hike, you should shop around for the best deal on your energy instead of relying on the price cap to keep your bills in check. Use a price comparison website like A Spokesman Said to look at all the deals on offer and find the one that’s best for you.
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