In October millions of people across the UK are going to see their bills rise in price- that’s right at the start of winter!
Regulator Ofgem announced that 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 increase by £139 to £1,277 a year.
Charities have warned that the timing of this change could be even more damaging to struggling families who are already facing losing an extra £20 a week from Universal Credit in October.
The regulator has announced Prepayment customers will see a jump of £153, from the current price of £1,156 to an increased cost of £1,309.
Jonathan Brearley, the chief executive of Ofgem 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 because there are significant savings to be had 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,” exclaimed 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”.
Rising wholesale costs were behind the increase Ofgem said, adding that the existence of the price cap meant households would save between up to £100 a year.
The watchdog also pointed out that energy users could switch to a better deal and save up to £200.
However, the Resolution Foundation says that policymakers need to do more for families who are struggling just below the poverty line.
Jonathan Marshall, senior economist at the Resolution Foundation says that the government must focus on widening the current warm homes discount scheme as well as reversing plans to remove the £20 Universal Credit uplift. Additionally, there should be more targeted support for families who are at risk of falling into fuel poverty.
A rise in energy prices will disproportionately impact those who are already struggling. Said Mr. Marshall.
The regulator sets the price cap twice a year and affects 11 million households throughout England, Scotland and Wales who have never switched suppliers or whose discounted deals have expired. Northern Ireland regulates their own caps.
