Blow for households with double whammy in April
More than 11 million households face a “worrying double whammy” in April, warns a Midlands energy expert.
Gas and electricity customers will see their bills increase by up to 9 per cent or £96 a year as the price cap is raised at the same time as the government’s Covid-related support scheme is due to be wound down.
“It will be a particularly heavy blow to those on universal credit who are already struggling with the impact of the pandemic and increasing debt levels,” said Ron Fox “as this will also be when the £20 a week increase to the benefits is set to end.
“It does make me question the whole point of a price cap which was designed to protect the most vulnerable households.”
The regulator Ofgem said default domestic energy deals would be raised to cover suppliers’ extra wholesale gas and electricity costs, with the bill for a typical gas and electricity customer going up to £1,138 a year. Pre-payment meter users will rise by £87 to £1,156 annually, affecting four million customers.
The cap, which is set twice a year by the regulator, affects 11 million or about half the households in England, Wales and Scotland who have never switched suppliers or whose discounted deals have expired. Northern Ireland sets its own cap.
The remainder are on so-called fixed deals, which will not be affected.
The caps set the prices that suppliers can charge for each unit of energy, but not the amount, so the more gas and electricity people use, the higher the bill. During lockdown with consumers at home more, so energy usage has gone up.
In October, Ofgem lowered the price cap by £84, but this has now been more than reversed with the rise scheduled for April.
The increase also includes an extra £23 a year to cover unpaid bills. The regulator said a further delay in recouping these costs would create only greater costs next winter, but as Ron pointed out this is likely to increase the number of people unable to pay. He also said that heating a poorly insulated home costs around £50 a month more than a more environmentally friendly home.
In December the Citizens Advice, the independent charity, said its research showed that 2.1 million households were behind with their energy bills, a rise of 600,000 compared with before the pandemic.
However, Ofgem pointed out that households were better off as the cap is estimated to keep tariffs about £75-£100 a year lower than the price suppliers would otherwise have charged. They said consumers could shop around for better deals to avoid the increase.
The consumer group Which? said savings of up to £260 were possible for those who switched.
For those who wanted to move supplier Ron said firstly they should enter the tariff and their energy usage from their most recent bill on a price comparison site which will suggest the cheapest supplier. If they are happy people can organise the switch online and it should be completed within weeks with no interruption to supply.
But Ron said an even cheaper solution in the long term would be to switch to green energy. For advice about that go to Noreus Ltd on the University of Keele Science and Innovation Park or call 0845 474 6641.
Caption: Giving a meter reading will provide an electric shock for many as millions of households face a double whammy in April.