Bills to Increase by £47 for Vulnerable Energy Customers

An increase in the cost of wholesale energy has caused the industry watchdog Ofgem to increase the maximum amount that an energy provider can charge a vulnerable customer by £47 per year.

The so called “safe-guard” tariffs were put in place initially by Ofgem to protect around five million households who were deemed to be vulnerable customers. The maximum amount that these customers can now be charged under new regulations is £1,136.

The energy regulator said that the move was fully justified as the last cap was put in place back in February and since then the cost of gas prices has increased which has in turn caused domestic energy prices to rise proportionately. Ofgem changes how much energy companies can charge these customers twice a year based on parameters outlined by the competition and markets authority.

Dermot Nolan, chief executive of Ofgem, said: “Any price rise for customers is unfortunate.

“But while the level of the tariff will rise in October, these customers can be confident that this increase is justified and that their energy bill reflects the real cost of supplying gas and electricity.

“There are also better deals on the market for those who want to save even more money by switching.”

He added: “Because the safeguard tariff caps the price of each unit of energy used, not overall bills, the total amount prepayment customers pay per month will continue to vary based on their consumption.

The increase has come after numerous leading energy companies, including E.ON, SSE, Npower, Bulb and Scottish Power, all introduced price increases citing rising wholesale costs.

Various groups have been doing their best to inform customers about the price increases and attempting to get people to switch to cheaper tariffs. There have been various moves to get customers onto cheaper deals including new legislation and saw energy companies become obliged to inform customers of cheaper tariffs that were available.

There have also been various Collective Switching schemes, which involve which a third party pooling a group of energy customers and then negotiating with suppliers, offering the custom of the whole group to whichever offered the lowest priced tariff. Such schemes have had some success but there are still fears that many customers could still end up paying far more for their energy than they should be. Which? Has calculated that customers who do not shop around for the best energy deals can spend up to £400 more per year on their bills than those who do.

Ofgem is currently working on a separate cap, this one will be far more wide reaching, with around 11 million households on “poor value tariffs” expected to be affected. This cap is expected to come into place by the end of the year.

Michael Quinn

Michael is a dedicated author helping usave to write guides, blogs and news for the last four years. When not writing articles, you can usually find him at wine tasting events or having a political debate on the night tube.

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