Energy Bills Set to Rise for Millions of UK Households

Around 15 million households in the UK will see their energy bills rise from April after Ofgem raised the price cap.

Ofgem, the energy market regulator, claimed rising wholesale costs as the reason behind the price hike. From April, the average dual fuel customer will see their bills rise by £96 up to £1,138 a year. Prepayment customers will also see their bills rise by an average of £87 to £1,156 a year.

This news will come as a further blow to households struggling with their finances due to the Covid-19 pandemic. Charities have criticised the move from Ofgem, saying the timing of the price hikes along with the easing of the government’s furlough and other support schemes will be tough for customers to manage.

“This increase will be a heavy blow to a lot of households,” said Alistair Cromwell, acting chief executive of Citizens Advice. “For many people on universal credit it will come at the same time as the £20 a week increase to the benefit is set to end. With a tough jobs market and essential bills rising, now is not the time for the government to cut this vital lifeline.”

However, Ofgem have defended the price rises, claiming that the existence of the energy price cap is already saving customers up to £100 a year. They also highlighted the fact that gas and electricity customers are free to switch suppliers if they feel they’re not getting a good deal.

“Energy bill increases are never welcome, especially as many households are struggling with the impact of the pandemic,” said Jonathan Brearly, chief executive of Ofgem. “We have carefully scrutinised these changes to ensure that customers only pay a fair price for their energy.

“As the UK still faces challenges around Covid-19, during this exceptional time I expect suppliers to set their prices competitively, treat all customers fairly and ensure that any household in financial distress is given access to the support they need.”

Ofgem’s price cap was introduced at the beginning of 2019 and is reviewed twice a year. It was designed to protect around 11 million customers who have never switched energy providers, and 4 million on prepayment meters, from being ripped off by extortionate rates.

Currently, around half of all households in the UK will be affected by the upcoming price rises.

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What can I do to beat the price cap rise?

The best way to avoid being affected by the upcoming price increases is to switch a new energy supplier before the cap changes in April. This is especially true if you haven’t done so in over a year. If you haven’t switched in a while, it’s likely that you’re on your supplier’s standard variable tariff, which are the very tariffs that will get more expensive from April.

When you compare energy deals, look for fixed-price energy tariffs. With these types of deal, the price you pay for each unit of energy stays constant throughout the duration of your contract, meaning no nasty surprises in your bills at the end of the month.

Similarly, if you are on a prepayment meter, you should also consider switching to a fixed-price deal with a standard meter. If you’re currently renting, speak to your landlord about the possibility of changing your meter and energy deal.

Fergus Cole

Fergus is a journalist specialising in the personal finance, energy and broadband sectors. He also has a passion for travel and adventure so tries to make the most of this in any spare time he gets.

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