£139 energy price cap increase points to ‘perfect storm’ for consumers this autumn



Energy regulator Ofgem has confirmed the energy price cap is set to increase by at least £139 as gas price increases reach a record high.

The watchdog said today that its energy price cap, which offers a safety net for customers who haven’t switched by making sure that suppliers only pass on legitimate costs, will increase from October 1. Those on default tariffs paying by direct debit will see an increase of £139 from £1,138 to £1277. Prepayment customers will see an increase of £153 from £1,156 to £1309.

The increase, which will impact the 15 million customers protected by the cap, has been driven by a rise of more than 50% in energy costs over the last six months, with gas prices hitting a record high as inflation jumped amid the easing of pandemic restrictions, Ofgem said.

Ofgem adjusts the level of the cap up or down twice a year to reflect the costs of supplying electricity and gas for suppliers.  Earlier this year the cap increased by £96 to £1,138 for 11 million default tariff customers, and by £87 to £1,156 for 4 million pre-payment meter customers.

Jonathan Brearley, chief executive of Ofgem, said: “Higher energy bills are never welcome and the timing and size of this increase will be particularly difficult for many families still struggling with the impact of the pandemic.

“The price cap means suppliers only pass on legitimate costs of supplying energy and cannot charge more than the level of the price cap, although they can charge less.

“If you’re struggling to pay your bill you can get in touch with your supplier to access the help that’s available and if possible, shop around for a better deal.

“We have put tough rules in place to ensure suppliers treat customers who are struggling with bills fairly, and welcome their commitment to reach out to those who most need help this winter. Where help is not forthcoming, we will not hesitate to act.

“I appreciate this is extremely difficult news for many people, my commitment to customers is that Ofgem will continue to do everything we can to ensure they are protected this winter, especially those in vulnerable circumstances.”

Households that shop around and sign up to fixed plans with suppliers are not subject to the price cap. Customers are often able to save hundreds of pounds by choosing a fixed tariff over the default.

Citizens Advice Scotland (CAS) warned that consumers now face a “perfect storm” of higher bills and reduced incomes this autumn if the UK Government goes ahead with plans to cut Universal Credit by £20 a week in September.

The charity is also concerned about the increase coming in as the furlough scheme ends, with the risk of further job losses across the economy.

CAS fairmarkets spokesperson Kate Morrison said: “Consumers are facing a cost of living shock this autumn.

“A further increase in the price cap in October will mean higher bills just when the government is proposing to cut Universal Credit by £20 per week.

“There also remains the risk that the end of the furlough scheme in September could see job losses across the economy – the last thing you need when you’ve just lost your job is your bills going up.

“Higher bills and lower incomes is bad news for consumers, and won’t help the recovery. 

“That this increase seems to be driven by the increasing cost of fossil fuels should also focus the mind ahead of COP 26 in Glasgow this year. It’s why we need to switch to low carbon heating as alongside the right actions from government it will be cheaper for us all in the long run.

“If people are struggling with energy bills they can also turn to the Citizens Advice network for support. We can help with specific energy advice as well as ensure you are getting all the money you are entitled to.”



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