ENERGY SUPPLIERS HIKE BILLS AS PRICE CAP COULD PUSH UP COSTS FOR MILLIONS
- Households see cheapest energy deals hiked by £78 ahead of price cap decision
- The potential increase to energy bills comes as nearly three in 10 (29%) households with children at home say they have struggled to pay their bills in the past week
- comparethemarket.com have an energy index tool that allows households to compare the price they pay for their energy against the current price cap level
8 February 2021 – Energy suppliers have increased bills by £78 since the start of December, as the new price cap level could rise for millions of households, according to research from comparethemarket.com.
A decision on whether the default energy price cap will change from its current level of £1,042, for dual fuel average consumption households, is expected to be announced by Ofgem in early February. Ahead of this, comparethemarket.com’s research shows that the average price for the top 20 cheapest available tariffs on the market is currently £935. This means that households could be £106 better off by switching provider rather than rolling onto their supplier’s Standard Variable Tariff (SVT).
However, since early December 2020, energy suppliers have been increasing the price of the cheapest available tariffs on the market. At the beginning of December, the average cost of the cheapest 20 available tariffs was £857, but this has risen to an average of £935 at the end of January - a difference of £78 for household bills.
The price cap was introduced in 2019 to limit the amount that energy companies can charge households on their rollover tariffs. An increase in wholesale energy costs and the knock-on effects of Covid-19 suggests that the price cap level could increase from 1st April, impacting millions of households. Ofgem has also proposed an additional one-off charge of £21 could be levied to help recuperate the cost of unpaid bills from households that have experienced financial difficulty during the pandemic.
A potential rise in energy costs comes as households with children at home say they are struggling with their finances. Separate research from comparethemarket.com found that nearly three in ten (29%) of families with children at home struggled to pay their bills in the past week, compared with 16% of those without children at home. In addition, 28% of families with kids say they feel less financially secure this time around than in previous lockdowns, compared to 16% of households who do not have children at home.
In order to help people avoid rolling onto a Standard Variable Tariff (SVT), comparethemarket.com has a tool to help customers see how much they are paying for their energy compared to the current price cap level and the average for their local authority. Customers can also sign up to AutoSergei to receive regular alerts when a cheaper tariff becomes available to them, as well as getting a notification when their fixed deal is about to expire.
Peter Earl, Head of Energy, at comparethemarket.com, said:
“A price cap increase will be a bitter pill to swallow for millions of households. In particular, it would hit many families who are already struggling financially and will soon face the shock of their energy bills after a winter spent in lockdown.
“The 11 million households stuck on their supplier’s standard tariff have until the 1st of April to move onto a more competitive deal or risk significantly overpaying for their energy. There is rarely any benefit to being loyal to your energy supplier. One of the best ways to cut down costs is to shop around and regularly switch tariff or supplier.”
All data has been secured through comparethemarket.com and data supplied by a third party Energyhelpline.
Notes to editors:
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