Energy prices will rise for millions of people across the UK in October, right at the start of the cold weather.
Regulator Ofgem said the price cap for default domestic energy deals would be raised to cover suppliers’ extra costs. The typical gas and electricity customer is likely to see their bill go up by £139 to £1,277 a year. Charities warned the timing would hit struggling families hard, who already face losing an extra £20 a week from Universal Credit in October. Prepayment customers will see an increase of £153, from £1,156 to £1309, the regulator said.
Ofgem chief executive Jonathan Brearley told the BBC: “The reason the price cap is going up is there has been a record increase in energy prices across the board, not just in gas and electricity but in petrol and diesel.” He urged customers to shop around for the best tariffs, saying there were big savings to be made by switching. “You don’t have to live with this tariff. The price cap is a backstop. We’d encourage any customer, particularly those struggling to pay their bills, to contact their supplier, and get access to a wide-range of help and support,” he said. “This is a devastating increase,” said Peter Smith, director of policy and advocacy at fuel poverty charity National Energy Action “Millions of household budgets are already stretched to the limit and this massive increase could not be coming at a worse time.”
Ofgem said rising wholesale costs were behind the increase, adding that the existence of the price cap meant households would save between £75-£100 a year. The watchdog also pointed out energy users could switch to a better deal to save up to £200. However, the Resolution Foundation says policymakers need to do more to help families who are close to the poverty line. Jonathan Marshall, senior economist, said the government must focus on widening the current warm homes discount scheme, as well as reversing the planned removal of the £20 Universal Credit uplift. There should also be more targeted support for families at risk of falling into fuel poverty. “A rise in in energy prices will disproportionately impact those who are already struggling,” said Mr Marshall.
The price cap, set twice a year by the regulator, affects 11 million households in England, Wales and Scotland who have never switched suppliers or whose discounted deals have expired. Northern Ireland sets its own cap. That accounts for about half of all UK households. The remainder are on so-called fixed deals, which will not be affected. Around four million prepayment meter customers will also be affected. The cap sets the prices that suppliers can charge for each unit of energy, but that does not mean there is a limit to how much people can pay. The more gas and electricity you use, the higher the bill.
Although the above article applies to the domestic industry, the same is true for the commercial sector and to determine if you’re currently over-paying for your energy accounts, please contact us directly on 01565 755600.
(Source: BBC Website, August 2021).
