Millions of families face £100 rise in energy bills
FAMILIES could see energy bills surge by almost £100 after the regulator told suppliers they could pass the rising price of gas and electricity on to customers.
More than 15million households may face an increase in their monthly statements after Ofgem announced it would raise its price cap.
The regulator sets the price cap – a limit on the unit rate and standing charge for default tariffs – twice a year. Around 11 million households using this tariff will be hit by the £96 hike to £1,138 from April 1.
Another four million households on pre-payment systems could see bills rise by £87 to £1,156 at a time when coronavirus has hit family budgets. Time off for self-isolation, salaries cut during furlough and rising joblessness has left many Britons struggling to make ends meet.
‘Energy bill increases are never welcome, especially as many households are struggling with the impact of the pandemic,’ said Ofgem chief executive Jonathan Brearley.
He told the BBC: ‘We have carefully scrutinised these changes to ensure that customers only pay a fair price for their energy.’ In October, Ofgem lowered the price cap by £84, but that has now been more than reversed because of greater costs on the wholesale markets.
The effects of the decision on some customers is compounded by the extra £23 energy suppliers have been allowed to impose for bad debt. Mr Brearley argued that it was better to make the change before summer rather than ahead of winter.
But Citizens Advice acting chief executive Alistair Cromwell called the increase ‘a heavy blow’.
He added: ‘With a tough jobs market and essential bills rising, now is not the time for the Government to cut this vital lifeline.’
Emma Pinchbeck, chief executive of trade body Energy UK, 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.’
The £1,138 annual cap calculation is based on the usage of an average household. Energy suppliers are required to price below that cap. Most set their prices a couple of pounds below the cap level.
Martin Lewis, of the website Money Saving Expert, urged families to switch suppliers to get on to a fixed tariff before the price hikes take place. He said: ‘The sooner you do it, we’re in a high energy use period, the sooner you save. So you may as well get on with it.’
‘Households are struggling’