Big Six customers to be hit with energy price rise
Following the news last month that Ofgem will push up the energy price cap from the 1st of April this year, five major energy suppliers have announced that their prices will increase from that date. Find out whether you’re affected and how much you’ll be paying from April by reading on.
Energy regulator Ofgem announced on the 5th of February that the cap on standard variable tariffs will go up by £96 to £1,138 and that the cap on prepayment tariffs will increase by £87 to £1,156. The cap does not, of course, affect customers on fixed tariffs.
Which providers are putting up their prices & by how much?
The providers that have confirmed that their customers can expect an energy price rise from April are the following:
British Gas, EON and Npower will all put up their prices by the maximum amount allowed, while EDF and SSE will both increase theirs to just £1 below the cap. Ofgem estimates that around 15 million customers will be affected by the change, with 11 million UK customers on their provider’s standard variable tariff and 4 million using prepayment meters.
What is a standard variable tariff?A standard variable tariff is one in which the price you pay for energy can vary according to the wholesale price of energy. In short, if you’re signed up to a variable tariff, your provider can increase the unit rate you pay per kWh as it pleases - as long as it falls below Ofgem’s price cap.
Why is the energy price rise happening?
In its press release from February, Ofgem cites a big increase in the wholesale price of energy as the reason for the energy price rise.
The price of energy had fallen considerably last year due to a decrease in demand that resulted from the first lockdown, when industry collapsed and overall energy use across the UK fell as a result. The price cap had been brought down to reflect this - in October of last year it fell by £84 to its lowest-ever level.
Ofgem tends to revise the level of the cap once or twice a year, however, and the latest revision is a reflection of increased demand which has pushed prices back up. Jonathan Brearley, the regulator’s chief executive, was almost apologetic in his announcement:
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.
How can I avoid paying more?
The best way to avoid paying more is to shop around for a better tariff. Mr Brearley himself said in his announcement that while the price cap still protects consumers to a certain extent, “if they want to avoid the increase in April they should shop around for a cheaper deal.”
It’s important to bear in mind that this may not be the only energy price rise this year, as Ofgem could put up the price cap again in six months if the wholesale price of energy rises once more.
A fixed tariff is what we would suggest if you want to safeguard yourself against further increases - not only are there plenty out there offering a better rate than the one you’re currently on, but a fixed tariff will also mean you’re invulnerable to an energy price rise such as this during your term.
What is a fixed tariff?A fixed tariff is one in which your daily standard charge and your unit rate - the price per kilowatt hour (kWh) of energy used - is fixed for the length of your contract. It does not, as many believe, mean that you pay the same each month regardless of how much energy you use.
Those struggling to pay their bills as a result of the energy price rise are also advised by Ofgem to contact their supplier immediately as they may be eligible for help in the form of payment breaks, suspending the disconnection of credit meters, and schemes like the Warm Home Discount or the Winter Fuel Payment.