The energy regulator Ofgem has announced that the level of its price cap is set to rise to a record high of £1,971 as the energy industry continues to deal with the fallout of a volatile gas market.
This constitutes a 54% increase from the previous level of £1,277, which was itself a record increase. The price cap level has now risen three times in a row.
The energy price cap was introduced in January 2019 and sets the maximum price energy suppliers can charge per unit for their standard variable or default tariffs. The cap is reviewed twice a year in February and August, with the new rates coming into effect in April and October.
These price increases will affect around 11 million customers on standard tariffs and four million on prepayment meters. Uswitch research conducted recently found that two million homes could be pushed into debt as a result of the price cap increase and 50% of households say that assistance from the government over rising energy costs in the last year has been inadequate.
Justina Miltienyte, energy policy expert at Uswitch.com said: “The severity of the energy crisis is now becoming a reality for 22 million households. This is the toughest energy price hike in recent memory and brutally comes at a time when other essential bills are rising.
“While the Government will try to soften the impact of this rise, there’s no getting away from the fact that this is going to have damaging consequences for households.
“The expected measures will only be sticking plasters on a long term problem, and it’s consumers who will ultimately be paying the price.
“This situation is even worse for those in fuel poverty, who are already trapped in a vicious cycle of energy debt. It calls into sharp focus just how vital the Government support for the most vulnerable households is.
“If you're worried about getting into debt, it is important to contact your supplier as soon as possible. It’s also worth checking what grants and schemes might be available to help cover your energy bills, particularly if you or someone you know is vulnerable.
“This is a deeply distressing time, but it’s vital to stay engaged with what’s happening across all your bills to make sure you’re paying no more than you have to.
“The only saving grace is that the price rises won’t take hold until April 1st, meaning that customers on standard plans will keep their existing rates for the rest of this winter.
“Despite the bill hike announcement, for most people it’s probably best to stay on your supplier’s default tariff for now, unless you are already locked into a fixed deal. It’s important to keep an eye on the market and be ready to fix a new deal as and when they become available.”
With very few expensive deals on the market, switching isn’t an option for most people, so what are the options?
See what energy support schemes or grants you - or any vulnerable friends or relatives - may qualify for, from either the Government or energy suppliers.
Stay up to date with what’s happening in the energy market so that you will be ready to switch when the time is right. The Uswitch Quick Checker provides personalised information about your energy plan and a recommendation of what you should do.
It’s more important than ever to be energy efficient.
There are simple and affordable ways to prevent heat loss, such as draught-proofing doors and window frames, bleeding radiators and keeping thermostats at a steady temperature.
Check out our other energy saving tips here.
While there are currently no savings when it comes to your energy bill, you may be able to cut costs on your other household bills.
Reviewing broadband, TV and mobile contracts with Uswitch could be a quick and easy way to make a reduction on your monthly outgoings - seven million people are currently out of contract and overpaying by a staggering £849 million a year.