Energy Prices to Rise This Spring
Millions of Brits are facing a hike in energy costs as regulator Ofgem announced a price cap increase in February.
As of April 1, the new cap could see households typically pay an extra £117 each year in the move which the regulator has said is to allow suppliers to cover higher wholesale costs.
Big name brands Eon, EDF Energy, and Npower were the first to unveil plans to increase costs within days of the announcement with Eon upping princes to the maximum permitted from April.
According to Ofgem in the last year higher oil prices, along with other factors such as increased demand for gas during the ‘Beast from the East’ led to a rise in wholesale gas costs which has influenced the cap rise.
Other costs, including network costs for transporting electricity and gas to homes and costs associated with environmental and social schemes (policy costs), have also risen and contributed to the increase in the level of the caps.
Approximately 11 million households are on default, or standard variable tariffs and will be affected by the price increase, while the four million people using pre-payment meters will see a rise of £106 from the previous cap level.
Speaking of the price rise 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.
“Alongside the price caps, we are continuing to work with government and the industry to deliver a more competitive, fairer and smarter energy market that works for all consumers.”
Switch onto your energy options
With an energy price rise on the horizon in just five weeks and more energy companies expected to follow the lead of Eon, Npower and EDF energy, consumers are being urged to consider switch suppliers to find the best deal.
According to Which, remaining on a tariff which rises to the level of the new price cap could see someone overpay by up to £348 per year in comparison with the cheapest deal currently on sale.
Shopping around is vital when it comes to energy supply and switching supplier is easier than it may first appear. Below are some steps you can take to lower your bill:
- Find out how much gas and electricity you use per year in kilowatt hours (kWh) and use these figures to get accurate quotes from price comparison websites.
- Know the same of your tariff to compare with offers currently on the market to find the best suited to your needs.
- Decide if you’d like a fixed or variable tariff. One-year fixed tariffs are usually competitively priced while variable deals aren’t always expensive, but prices can increase at 30 days’ notice.
- If you’re planning to move home soon or want to switch before your fix term ends, it’s important to consider exit fees and weigh up in comparison to the amount you could save.
- Paying by debit card and managing your account online can be cheaper as paper bills often add to the cost of a tariff.
- Once you’ve selected your supplier, your current energy company will be informed, and the process will be complete in around 18 days.
- Remember there’s a 14-day cooling off period should you decide you no longer want to switch.
If you are struggling to keep up with your utility bills and need more information about the options available to you in dealing with debts, you can always speak confidentially with one of our friendly advisors on 0808 2234 102.