Energy price cap will rise by £117 to £1,254 a year affecting 15million households as regulator blames suppliers’ increased costs
- The cap on standard variable tariffs (SVTs) was introduced on January 1
- Customers told they would save an average of £76 a year or around £1billion
- But Ofgem has announced today a rise of £117 to £1,254 a year from April 1
- Similar rise expected to be unveiled for households with pre-payment meters
Eleven million households supposedly protected by the Government’s energy price cap will be hit with price increases of £117 a year.
The cap on standard variable tariffs (SVTs) was introduced on January 1 with enormous fanfare.
Customers were told they would save an average of £76 a year – or around £1billion in total.
Theresa May had said it would ‘cut bills for millions of families and people across the UK who have been ripped off by energy companies for far too long’.
However industry regulator Ofgem has reviewed the cap and is announced today that it will go up by £117 to £1,254 a year from April 1 due to hikes in wholesale costs.
The cap on standard variable tariffs (SVTs) was introduced on January 1. Stock picture shows a gas hob
Ofgem said the price cap for pre-payment meter customers will also increase – by £106 to £1,242 a year from April 1.
It insisted those affected will still pay a ‘fair price’ for their energy as the increase reflects a genuine increase in underlying wholesale costs, rather than provider profiteering.
It said even after the April increase, those on default deals – including standard variable tariffs (SVTs) – will still be saving around £75 to £100 a year on average thanks to the price cap, which was introduced in January.
Dermot Nolan, chief executive of Ofgem, said: ‘Under the caps, households on default tariffs are protected and will always pay a fair price for their energy, even though the levels will increase from April 1.
‘We can assure these customers that they remain protected from being overcharged for their energy and that these increases are only due to actual rises in energy costs, rather than excess charges from supplier profiteering.’
Experts say customers were misled by ‘fake’ claims from the Government and Ofgem that they’d save £76 over a year.
But Stephen Murray, of MoneySuperMarket, said the issue was an ‘easy situation to fix and the message is clear – take control of your bills and don’t let the regulator determine how much you’re paying.
Go online today and switch to a competitive tariff. It takes five minutes and you could save £200 on your bills.’
And head of energy at auto-switching service WeFlip, Sally Jaques, added: ‘It will be ironic if, three months after being introduced, the Government’s own price cap unintentionally delivers one of the single biggest energy price increases the market has seen for years.’