WATCH: Energy bills to rise by up to £96 for millions as Ofgem hikes price cap
Energy prices will rise by up to £96 this April affecting 11 million households, Ofgem reveals.
The price hike means for six months from 1st April 2021, the price cap will increase by £96 to £1,138 for 11 million default tariff customers, and by £87 to £1,156 for 4 million pre-payment meter customers.
'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,' said Jonathan Brearley, chief executive of Ofgem. '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.'
The cap sets a limit on the prices that suppliers can charge for each unit of energy – it is not a cap on customers' overall energy bills, which will still rise or fall dependent on energy consumption.
Why is there a price hike?
The price cap is returning to pre-pandemic levels, largely as a result of changes in wholesale energy prices.
These wholesale prices fell sharply last year during the first lockdown, as the price cap fell by £84 in October; its lowest level yet for the current winter period. However, demand for energy has since recovered which has pushed wholesale prices back up to more normal levels.
'As the UK still faces challenges around COVID-19, during this exceptional time I expect suppliers to set their prices competitively, treat all customers fairly and ensure that any household in financial distress is given access to the support they need,' Jonathan Brearley continued.
'The government and Ofgem have been working with the energy industry and consumer groups to support customers through this difficult time and I urge anyone worried about paying their energy bills to contact their supplier and access the help available.'
Suppliers are required to provide emergency credit to customers struggling to top up their pre-payment meters. They should also put those who are behind on their bills on affordable repayment plans, and should not disconnect their customers.
The price cap protects consumers who have not switched energy supplier by ensuring they pay a fair price for their electricity and gas. The level of the cap is adjusted by Ofgem twice a year to reflect the costs of supplying electricity and gas for suppliers.
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