£100+ price hike for up to 15m households as new energy price caps start this month.

Are you shocked by your latest energy bill? Is your money going up in a puff of smoke –quite literally?    Ofgem’s decision to lift two energy price caps originally put in place to avoid big price hikes for all households is set to result in a massive price increase of around £117 per household, up to 10% for a whacking 11 million customers on standard variable rate or default tariffs. Kicking in from the 1st of April, the increase is equivalent to a new maximum ceiling of up to £1,254 a year, or £104.50 a month for those with a typical MEDIUM energy bill.

Bearing in mind that energy bills are based on the cost of heating and running your home, no matter to a large extent how many people live in it, this could be another added cost, (over an above inflation) for single households.

Ofgem (the Office of Gas and Electricity Markets) originally set up to act as the independent regulator for gas and electricity markets in the UK to champion our interests monitors the energy suppliers and keep them in check. Their decision, taken as a result of the rising wholesale energy prices at the time, will leave many consumers on a standard variable rate paying more for their electricity and gas than before the cap took effect on 1 January this year

Ofgem also announced a rise of £106 a year to £1,242 for a further 4 million households on prepayment meters, considered to be the most vulnerable energy customers already on a tight budget, many of them single or one adult households.

This eye-watering increase to the price cap will be a shock to the system for people who thought that it would protect them from rising bills. Alex Neill:Which

The huge increase, which effectively wipes out the average saving of £76 from the original first price cap that came into force on the 1st January, will be a bit of an embarrassment for the government who promised that households of every size would save money under the flagship scheme.

WHAT IS AN ENERGY PRICE CAP & HOW DOES IT WORK? 

The price cap, one of the biggest shakeups of the energy market since energy was privatised was put in place on the 1st January this year to protect those households on a standard variable tariff from being ripped off.  These are the group of consumers who energy companies quite simply take advantage of by capitalising on consumer loyalty

Acting as our eyes and ears, energy price caps limit how much suppliers can charge you per unit of gas or electricity and for the standing charge you pay for your meter and your connection to your energy supply. The caps they put in place are based on how much it really costs, on average, to get energy to your home. They  ensure you pay a fairer price for your energy and are protected from being overcharged by energy suppliers. Ofgem have also put in place a separate energy price cap for 4 million homes on prepayment meters, which are also going up

Price caps are movable –they’re NOT a once a year thing. OFGEM keep a close eye on what’s happening on our behalf, reviewing the trends, wholesale energy prices etc and the and so the level of energy price cap every six months.

Can I avoid the increase?  Is it too late?

Yes you can, and no it is never too late to switch suppliers. Anyone on a Standard Variable Tariff (SVT) can switch at any time. it’s more important than ever to make sure you’re on a good energy deal and there are really good, genuine, savings to be had.

CHECK OUT YOUR ENERGY SUPPLIER. USE A SWITCH COMPARISON SITE

Whether you rent or buy, switching energy providers can literally save you hundreds of pounds on your utility bills. and / or fixing can get you a cheaper deal.

  • Spend a few minutes on one of the many comparison sites or sign up to an auto-switching service and move to a cheaper tariff, with your existing suppler or a rival one.
  • Compare prices with other providers. The easiest way to bring down the cost of your bill is to compare prices with other providers and see if switching and fixing a can get you a cheaper deal
  • Do a thorough check of all energy companies, large and small. Getting a fixed rate tariff with all sorts of deals energy companies may offer you to switch to their energy company are almost always much cheaper than a Standard Variable Tariff, (watch out for any exceptional cases though). Don’t overlook the smaller companies though, who may also provide a really good variable tariffs as well as first class customer service.

Falling energy prices just around the corner.  Could we get lower bills soon?

Monitoring a more recent fall in the wholesale costs of energy recently Ofgem have said that if the current trends continue, they expect to lower the energy price cap around October, with one analyst expecting a fall of around £50 for a ‘typical’ duel fuel bill. All very welcome news, but not as much as the potential saving all households could make by switching from a Standard Variable Rate to a good Fixed Rate Tariff

Are you planning a switch? Are you struggling to pay your energy bills this year? Tell us your story