Credit, Collections & Insolvency News
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, the company’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 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.
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. ”