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From April 1, the energy price cap will increase by £96 to £1,138 for 11 million default tariff customers, and by £8 7 to £1,156 for four million pre-payment meter customers, the government regulator OFGEM has said. The price cap is in place to protect customers who have not switched supplier by making sure they pay a “fair price”. However, the efficacy of the price cap has been brought into question by a plethora of organisations.
“So call your supplier and make sure you get the help you’re entitled to.”
However, some experts have claimed the new price cap does not represent “good value for money”.
Peter Earl, head of energy, comparethemarket.com, said: “Raising energy costs for millions of households by an average of £96 is an extraordinary move in the current environment.
“It calls into question the whole point of a price cap which was designed to protect the most vulnerable households.
Richard Neudegg, head of regulation at Uswitch.com, said: “The pandemic has already placed many households under great financial strain. News of the price cap rising by an average of £96 from April will be a bitter pill to swallow for the 11 million default tariff customers with standard meters, many of whom are already struggling to make ends meet.
“The price cap increase is an aftershock of last year’s lockdown, partly because many customers have struggled to pay their energy bills, plunging them into debt that suppliers have been unable to recover.
“With more of us at home, usage remains high and energy costs hike, there’s a very real danger that the rising price cap will end up trapping households on default tariffs into a vicious circle of energy debt.
“The largest contributor to the price cap increase is the dramatic rebound in wholesale energy costs since the first lockdown.
“Households on variable tariffs face continued uncertainty over bills, with energy prices prone to rising and falling as the price cap pendulum swings to and fro, with changes every six months.
“The good news is that there are plenty of fixed deals available that would protect households from market volatility and provide not just certainty and reassurance, but significant cost savings.
“The best value fixed deal currently available on the market is £945 from Avro Energy, while the new price cap will sit at £1,138, for typical usage. This means that by switching, households could save themselves £193 across their annual energy bills.”
OFGEM told Express.co.uk: “It’s not the best price but it’s a fair price. The price cap legislation has set Ofgem two objectives for the price cap – first to protect customers who don’t switch. And we’re doing that.
“The second is to enable competition in the energy market to continue. That means setting the price cap at a level which allows efficient suppliers to offer cheaper deals below the level of the cap for the more than 10 million customers who have switched to fixed deals.
“We’ve done this, and we are still seeing even better value deals on the market and high switching rates – households can save up to £150 by switching. Because ultimately, we believe a fully competitive market is the best way for all consumers to get a better deal.
“We encourage those who remain on default deals who want to save even more money to speak to their supplier or shop around for one of these deals. But if they don’t, they will always have a basic level of protection and pay a fair price for their energy.”
