Ofgem price increase: What it means for your energy prices | Personal Finance | Finance
The average household energy bill is to increase by £149 from October after the regulator said it was increasing its price cap.
Ofgem announced it is hiking its price cap by 10 percent to £1,717 from the current £1,568 for a typical household in England, Scotland and Wales.
That is around £117 cheaper than the cap in October last year, which was £1,834, but the change has sparked warnings about the impact of the rise on “vulnerable” households.
It comes as millions of pensioners face a winter with less support after the Labour Government decided to scrap winter fuel payments for those who do not receive pension credits or other benefits. About 10 million pensioners will miss out on payments of up to £300 this year.
You can check the impact of Ofgem’s 10 percent energy price rise using Express.co.uk‘s energy price calculator below.
The price cap changes every three months and is set to rise from October due to higher wholesale energy prices. Here’s what the cap will be set at from October 1 according to MoneySavingExpert‘s energy and utilities analyst, Clare Casalis.
If you pay by monthly direct debit, it’s £1,717 a year on average for a typical dual-fuel household, affecting all those on standard variable tariffs, meaning more or less everyone not currently on a fixed rate. This is a rise of 10 percent.
For those who prepay for their energy, prices will rise by 10 percent to £1,669 a year. If you pay on receipt of a bill, it’s a 10 percent rise to £1,829 a year. It is important to remember that if you use more energy then you pay more.
Jonathan Brearley, Ofgem’s chief executive, said: “We know this rise in the price cap is going to be extremely difficult for many households.
“Anyone who is struggling to pay their bill should make sure they have access to all the benefits they are entitled to, particularly pension credit, and contact their energy company for further help and support.”
He also urged consumers to “shop around” and consider opting for a fixed-rate tariff that could save people money.
Mr Brearley said the regulator was reviewing standing charges but that it “can’t make those charges disappear”.
He told Sky News: “We have been told loud and clear that people don’t like standing charges the way they are now and what we’re doing today is setting out a series of choices about how we might reform them.
“But, as a regulator, there are no easy options. We can’t make those charges disappear. We can simply move them from that fixed charge to the amount you pay per unit on your energy bill.”
Energy Secretary Ed Miliband said Ofgem’s announcement was “worrying” for many people. He said: “This will be deeply worrying news for many families.
“The rise in the price cap is a direct result of the failed energy policy we inherited, which has left our country at the mercy of international gas markets controlled by dictators. The only solution to get bills down and greater energy independence is the Government’s mission for clean, homegrown power.”
