The energy regulator Ofgem has announced a higher-than-expected increase in the energy price cap with energy bills rising by £111 for a typical household per year.
The announcement follows the January energy price cap increase, whereby bills increased by 1.2%. Now, the cap is rising by 6.4% and households will expect to see an increase of £9.25 per month, taking the average annual energy bill to £1,849 per year.
The energy price cap is set every three months, meaning this increase is from April to June this year, with the energy regulator stating the recent spike in wholesale prices was responsible for around 78% of the total increase, as well as inflation.
The increase is calculated as an average across England, Scotland and Wales and based on typical use for those who pay for their energy bills via a Direct Debit. However, Ofgem has stated customers on a fixed tariff will not be affected by the change in price.
Since the November price cap announcement last year, four million customers have since switched to a fixed tariff, with Ofgem stating, that this is the largest movement of customers coming off the price cap and onto a fixed deal since the energy crisis.
A fixed tariff can save you money depending on your energy usage, however, there are plenty of nifty ways to save energy at home if you’re concerned about the price increase this April.
‘We know that no price rise is ever welcome and that the cost of energy remains a huge challenge for many households,’ said Jonathan Brearley, CEO of Ofgem.
‘But our reliance on international gas markets leads to volatile wholesale prices, and continues to drive up bills, which is why it’s more important than ever that we’re driving forward investment in a cleaner, homegrown system.’
If you’re concerned about the increased prices and how to pay the added costs, energy bill help is available. Ofgem is in support of the government’s plans to tackle rising debts within the energy sector – such as a proposed Debt Relief Scheme and plans to expand the Warm Home Scheme.
‘Energy debts that began during the energy crisis have reached record levels and without intervention will continue to grow. This puts families under huge stress and increases costs for all customers. We’re developing plans that could give households with unmanageable debt the clean slate they need to move forward,’ says Jonathan.
‘If anyone is worried about paying their bills, I would urge them to reach out to their supplier to make sure they’re getting all the help they can. Where possible, switching or fixing tariffs now could also help to bring costs down and provide certainty over coming payments.’
In real terms, if you are struggling with your bills, you can set up an agreed payment plan with your energy provider. Some energy companies also offer grants to help you pay off your energy bills such as British Gas, Ovo, E.ON, Octopus Energy, EDF and Scottish Power. You’ll need to speak to a debt adviser before applying and it’s important to note you don’t have to be a customer for British Gas to apply for their grant.
The new price cap is set to come in on 1 April, giving you some time to shop around for better deals or decide whether to fix your tariff. Unfortunately minimising your energy usage is the easiest way to save money at home. Here’s hoping the next quarter brings better news.
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