Why your heating bills could go up by £100 from today
- Credit: PA
Energy regulator Ofgem is raising the maximum price suppliers can charge for gas and electricity — in a move that could cost 15 million households up to £100 from today.
In the changes that will come in from April 1, Ofgem said its price cap for the 11 million households in Britain that are on their supplier’s default tariff could rise by £96 to £1,138.
The four million households with pre-payment meters could also see their bills jump by £87 to £1,156.
Explaining the price increase Jonathan Brearley, Ofgem's chief executive, 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."
He added: “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.
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The decision comes on top of an additional £23 rise that energy suppliers have been allowed to charge customers for bad debt.
During the crisis the companies have struggled to get some households to pay their bills. Because of this, Ofgem decided it needed to allow suppliers to spread that cost across the country.
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Ofgem reviews and changes the price cap once every six months.
The latest announcement more than wipes out the gains that households made in October, when the price cap dropped by £84 to a record low since the policy was introduced in January 2019.
Speaking to the BBC in February, Mr Brearley argued that it would be better to make a change now when the country is heading into the summer, a time when energy usage is lower, than in October, ahead of winter.
However Alistair Cromwell, Citizens Advice acting chief executive, called the increase “a heavy blow to a lot of households”, and said it would come as benefits are slashed for many.
“For many people on Universal Credit it will come at the same time as the £20 a week increase to the benefit is set to end,” he said.
“With a tough jobs market and essential bills rising, now is not the time for the Government to cut this vital lifeline”.
Emma Pinchbeck, the chief executive of Energy UK, a trade body for energy suppliers, said that the price cap is set in a way that is meant to be fair for both customers and suppliers.
“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,” she said.
The £1,138 annual cap is calculated 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.