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Energy bills to soar after providers pull nine in 10 deals

·3-min read
Hands pressing light switches
Hands pressing light switches

Households could see their energy bills soar after providers withdrew dozens of deals in the face of rising wholesale prices.

Customers reaching the end of fixed-term deals have been left with few options to switch after suppliers pulled 83 energy tariffs this week, according to price comparison website Go Compare. There are now just nine tariffs – four dual and five electric-only – from four providers on its website. This is an 89pc decrease on normal levels.

Compare the Market, the comparison site, has temporarily suspended offering any energy quotes due to a lack of tariffs available.

The mass withdrawal of deals has come as a result of spiraling wholesale energy costs. Prices surged to 11 times their normal levels this week due to a crunch in gas supply, low wind speeds and power station closures, made worse by a fire at a substation in Kent which cut off power supplies from France.

Those wholesale costs make up around 40pc of household energy bills on average.

With few options to switch, customers who have reached the end of their fixed-term energy contract must try and negotiate with their current or face being moved to more expensive standard variable tariffs.

Although these are usually the most expensive deals on the market but are protected by the energy price cap, which sets upper limits on how much firms can charge. However this cap now stands at its highest ever level. Regulator Ofgem increased the price cap by £139 to £1,277 last month in response to rising wholesale costs.

Analysts at HSBC warned that the further rise could lead to a 15pc increase on bills when the price cap is next reviewed in February. This could potentially push the cap up to £1,468, a further £192 increase.

Some four in 10 households are on a standard variable tariff covered by the cap, equivalent to 11 million homes.

Tom Lyon, of Energyhelpline, said: “Over the last few months, we have seen the wholesale prices of energy increase rapidly. This unprecedented rise spiked on Wednesday following a fire at an electricity interconnector, reducing our imports from France.

“In response to this spike, suppliers have taken the temporary step of removing select tariffs from a range of sales channels in order to reprice them. We've started to see suppliers come back with updated costs."

A Compare the Market spokesman said: “Due to unprecedented rises in wholesale energy costs, a number of energy companies have temporarily made their tariffs unavailable to people wishing to switch.

"In order to protect our customers we have therefore decided to temporarily stop offering energy quotes via our website during this period of uncertainty. We will resume energy comparison as soon as we can be confident we can offer true comparison for customers.”

Many smaller energy firms have been squeezed by the supply issues. Two energy suppliers, Utility Point and People’s Energy, ceased to trade this week. The two firms had over half a million energy customers between them. In total, seven energy suppliers have ceased to operate so far this year.

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