Millions to see energy bills rise by up to £139 as Ofgem hikes price cap
Written by Hit Music Radio News on 06/08/2021
Around 15 million families will see their energy bills soar by up to £139 after the regulator hiked the price cap by the biggest increase yet.
The sharp rise, which will impact half the population who are on variable or default rates and prepayment meters, is mainly a result of increase in wholesale fuel costs, especially gas, according to Ofgem.
From October, default tariff customers paying by direct debit will see an increase of £139 from £1,138 to £1277, while those on prepayment meters will see a rise of £153 from £1,156 to £1309.
Customers who are on fixed tariffs, which are more likely to be better value, are unaffected by the cap.
Even ahead of the rise, Ofgem had moved to alert householders still reeling from the impact of the coronavirus pandemic.
Charities have also warned the increase “could not be coming at a worse time”.
Writing on the regulator’s blog, chief executive Jonathan Brearley wrote: “I know that the last 18 months have been tough for many households as a result of the COVID-19 crisis.
“Rising inflation and the forthcoming end of the furlough scheme on top of the impact that the pandemic has had on people’s livelihoods means that family finances are tight now.
“Unfortunately, against this backdrop I am today alerting customers that global prices for fossil fuels, especially gas, are increasing at an unprecedented rate.
“Ultimately this will feed into all customer energy bills in the UK.”
He added: “The increase, which comes into effect on 1 October, will affect around 15 million households on variable or default rates and prepayment meters – half the population – who are covered by the cap.
“This is difficult news for all households.
“Therefore, my message to energy companies is clear – you need to provide all available help and support to customers who are struggling as a result of this price change.”
Ofgem reviews and changes the price cap once every six months.
Energy suppliers are required to price below the limit, with most setting prices just a couple of pounds under.
The increase comes as energy deals have reached the highest cost for more than two years, according to data from Compare the Market.
The average price for one of the cheapest deals on the market is currently £996, the highest charge seen since February 2019.
© Sky News 2020