Energy bills to rise by up to £96 for millions as Ofgem hikes price cap

Around 15 million families will see their energy bills rise by up to £96 after the regulator hiked the price cap.

The return to pre-coronavirus levels is mainly as a result of increase in wholesale costs, according to Ofgem.

For six months from 1 April the price cap will increase by £96 to £1,138 for 11 million default tariff customers, and by £87 to £1,156 for four million pre-payment meter customers.

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Ofgem points out when wholesale energy prices fell sharply last year in the wake of the first COVID-19 lockdown, the price cap dropped by £84 in October to its lowest level yet for the current winter period.  

Demand for energy has since recovered which has pushed prices back up to more normal levels.

For the default tariff price cap level, Ofgem has also allowed suppliers to claim £23 to cover higher levels of customer bad debt with more people being unable to pay their bills due to the impact of the pandemic.

The regulator decided it should let companies spread this cost burden across households.

Ofgem reviews and changes the price cap once every six months.

Ofgem chief executive Jonathan Brearley said: “Energy bill increases are never welcome, especially as many households are struggling with the impact of the pandemic.

“We have carefully scrutinised these changes to ensure that customers only pay a fair price for their energy.

“The price cap offers a safety net against poor pricing practices, saving customers up to £100 a year, but if they want to avoid the increase in April they should shop around for a cheaper deal.

“As the UK still faces challenges around COVID-19, during this exceptional time I expect suppliers to set their prices competitively, treat all customers fairly and ensure that any household in financial distress is given access to the support they need.

“The government and Ofgem have been working with the energy industry and consumer groups to support customers through this difficult time and I urge anyone worried about paying their energy bills to contact their supplier and access the help available.”

But Citizens Advice acting chief executive Alistair Cromwell called the increase “a heavy blow to a lot of households”, and said it would come as benefits are also slashed for many.

Emma Pinchbeck, the chief executive of Energy UK, a trade body for energy suppliers, said: “Today’s rise reflects that the cost of buying energy – by far the biggest part of the bill – has risen significantly over the last few months.

“It also includes a greater allowance for debt given the difficulties many customers are facing in paying bills at present.”

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