Energy prices will rise by up to £117 from April after energy watchdog Ofgem raised the price cap, admitting that higher prices left it no choice.
Customers on the default tariff price cap will pay £117 more per year taking their annual outlay up to 1,254 per year while those on pre-payment meters will see an increase of £106 per year, paying on average £1,242.
What are the energy price caps on default and prepayment meter energy tariffs? See if you're affected and how:
— ofgem (@ofgem) February 7, 2019
The price cap is adjusted twice every year with the rise to be re-evaluated after the summer period which ends on October 1.
Today’s announced rise has been fuelled by higher wholesale energy costs, according to Ofgem, with increased oil prices off the back of demand during Beast from the East to blame. That has had a knock-on effect on electricity prices with £74 of the £117 default tariff rise attributable to that.
The rest is down to network costs for transporting electricity and gas and the price paid for implementing environmental and social schemes.
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“Under the caps, households on default tariffs are protected and will always pay a fair price for their energy, even though the levels will increase from April 1,” said Dermot Nolan, chief executive of Ofgem.
“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.
“Alongside the price caps, we are continuing to work with government and the industry to deliver a more competitive, fairer and smarter energy market that works for all consumers.”
Price rises had been in the pipeline for a while as the watchdog showed in December with a report produced in conjunction with University College London.
That study showed that Brexit’s impact on exchange rates could see customers paying £75 per year extra.
So amid freezing temperatures, the energy price cap has just been hiked by £117 – months after it was introduced. This comes after nearly two years of dither and delay by the government while suppliers hiked prices an unprecedented number of times https://t.co/TuWAYDSI1w
— Rebecca Long-Bailey (@RLong_Bailey) February 7, 2019
The message to consumers to avoid being stung by rising costs is to switch supplier regularly to seek out better deals.
“Unfortunately price rises were inevitable as the cost of supplying electricity and gas to our homes has been increasing,” said Gillian Guy, chief executive of Citizens Advice. “As unwelcome as this news is, it’s likely that prices would be higher still without the cap and there are steps people can take to ease the strain on their bills.
“There are big savings to be made by switching supplier or tariff. Simple steps like topping up your insulation, or installing better heating controls, can permanently reduce your bills and make your home more comfortable.”