Millions of homes will be forced to pay some of the highest energy bills for the past decade after the industry regulator gave suppliers the green light to raise their prices by up to £153 a year.
Households across Great Britain that use a default energy tariff to buy their gas and electricity can expect a sharp increase in their bills from October this year after the regulator lifted its energy price cap for the winter.
For 11 million households that pay by direct debit the average dual fuel bill will climb from £1,138 to £1,277 from October this year, up by £139. For another 4 million households that use prepayment meters – which are typically more socially vulnerable – the average energy bill will climb from £1,156 to £1,309, up by £153.
The energy price cap rise comes on top of a £96-a-year increase to the price cap announced six months ago, which came into effect from April.
The latest rise in the energy price cap is also expected to trigger a rise in fixed-rate deals, which are usually cheaper than default tariffs but which have been drifting higher as the UK’s gas market has reached 16-year highs.
Ofgem said gas prices havd risen to a record high in Europe “due to a recovery in global demand and tighter supplies”, which was increasing the cost of heating homes and pushing up electricity prices.
Jonathan Brearley, the 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.”
The sudden rise in energy bills has raised concern among fuel poverty campaigners that more than half a million more people may be unable to pay their energy bills as a result of the rise, which will coincide with the winding down of the government’s furlough scheme and the cut to universal credit from September.
The Resolution Foundation warned that the increase would disproportionately affect low-income families across the UK, many of whom are still suffering from the economic impact of the Covid-19 crisis.
Citizens Advice has warned that almost 2 million households were already behind on paying their energy bills, even before the new price rise and planned universal credit cut.
The number of households struggling to keep up with their energy bills has grown by 410,000 compared with levels before the pandemic, according to a survey by the charity, while another 6 million households were already worried about paying their energy bills.
Brearley said: “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.”
Source: The Guardian