Big Six customers ‘to pay £1.3bn more’
Bills set to rise as price cap fails to deliver a fair deal
MORE than 11 million customers of the Big Six energy suppliers will end up paying approximately £1.3billion more to heat their homes, due to the Government’s price cap.
Anger over energy prices will be fuelled by the results of British Gas owner Centrica this week. It is expected to announce that its full year pre-tax profits have rocketed from £142million to £1billion, due to cost-cutting and an improvement in the performance of its US business.
Last week Eon, EDF and Npower announced they would raise the price of their standard variable tariffs (SVTs) by the maximum amount allowed under the price cap of regulator Ofgem. These utilities will hike their prices by £117 to £1,254 from April. Launched at the start of the year, the price cap was supposed to save customers money.
Over the coming days, British Gas, the biggest supplier in the country, Scottish Power and SSE are expected to raise the cost of their SVTs.
The UK’s largest auto-switching service, LookAfterMyBills.com, calculates the price cap rise will add a cumulative £1.287billion to the bills of the Big Six’s 11 million customers. Lily Green, head of research at Look After My Bills, said: “Npower’s price rise comes as no surprise. That’s three down, three to go. Sadly we know that the Big Six energy companies regard the price cap as an ambition rather than a ceiling. We can expect the other three to follow suit.
“It’s clear that 11 million households are going to be hit with a mega price rise costing £1.3billion in total. The key message here is to not settle for less and switch.”
Sally Jaques, head of energy at switching service WeFlip, said: “With half of the Big Six suppliers confirming they are hiking their standard tariffs in line with the price cap, it is only a matter of time before we see the remaining three, made up of SSE, British Gas and Scottish Power announce increases.” According to WeFlip’s data, 43 out of 59 tariffs available nationally are cheaper than the current price cap for dual-fuel customers, which is £1,137.
She added: “More people than ever before have been switching energy suppliers to find better deals, but far too many are sticking with expensive SVTs.
“News of a price hike should prompt all affected customers to get online, compare prices and tariff options.”
CompareTheMarket.com said that 90 per cent of all fixed tariffs on offer are cheaper than the price cap, which it fears is lulling people into a false sense of security.
It has teamed up with celebrities such as The Saturdays singer Mollie King, Sky Sports presenter Chris Kamara and others for its Sofa Sundays campaign, which aims to show people how quick and easy it is to switch energy suppliers.
Compare the Market head of energy Peter Earl said: “Getting a quote and checking whether you’re on the best energy deal takes minutes, but can save households a significant amount of money on their bills annually as a result if they take action and switch.”