Ofgem has announced that it is raising its energy price cap from £1,137 to £1,254 for customers on default tariffs, and from £1,137 to £1,242 for customers on prepayment meters. The new cap limits will come into effect from 1 April 2019.
This constitutes a 10.29% increase and 9.23% increase respectively. The energy regulator says it has taken this decision based on rising wholesale costs (which comprise £521 of the overall cap) in the past year, with contributing factors such as the Beast from the East pushing prices up. This is the first review of the price cap since it came into effect in January.
Richard Neudegg, Head of Regulation at uSwitch, said: “People could be forgiven for feeling that they’ve been completely and utterly conned by the Government’s energy price cap. Ofgem proudly proclaimed that the cap would cut bills by an average of £76 a year when it came into force at the beginning of January - but just weeks later, it’s announcing a jaw-dropping increase. It’s now crystal clear that households were never going to save what was promised.
“We are in a ridiculous situation where standard plans are likely to be in higher in April than before the cap was introduced. With bills set to soar by an average of £117 for 11 million homes, Britain needs to brace itself for a billion pound price hike.
“Energy suppliers have traditionally been the ones blasted for blaming price rises on wholesale costs. Now, shamefully, Ofgem is doing the same thing, as the reality of energy prices catches up with the political hype.
“With the cap being reviewed every six months, those remaining on default tariffs should be prepared for the possibility of a state-sanctioned shock to household budgets twice a year.
“With the cheapest deal available today £286 less than the new cap, households on default energy tariffs have a very clear choice: carry on paying unnecessarily high prices that can frequently change at the mercy of a spreadsheet, or beat the price cap and cut your bills by switching to a fixed deal.”
Do what the price cap won't - fix your energy costs today
More information on the energy price cap, including what it is and what it means for energy customers throughout the UK, is available below.