Credit, Collections & Insolvency News
Eleven million households are being urged to shop around and switch energy provider to avoid a £117 (10%) price hike caused by the Government’s own energy price cap.
Research carried out by weflip has looked at 318 energy deals and found that 297 will be cheaper than the energy price cap in April, with 193 that could save households £100 and 32 that are £250 cheaper. The top ten cheapest tariffs could save people a maximum of £338.
The energy price cap came into force in January 2019, but in February, the industry regulator Ofgem confirmed that the level of the cap would rise from £1,137 a year for the typical household to £1,254 following the first review in April.
Following that announcement, all of the big six energy providers (British Gas, EDF, Eon, Npower, Scottish Power and SSE) confirmed that they would be raising their standard variable tariff (SVT) in line with the price cap. As a result, 11 million households will see their energy bills increase by around £117 (10%) from 1st April.
weflip’s research also reveals that the big six providers are now among the most expensive SVTs on the market. Of the 67 providers analysed, only two SVTs were more expensive than the big six.
Sally Jaques, Head of Energy at auto-switching service weflip, said “Time is running out for millions of households to avoid the biggest energy price rise in recent history. 11 million homes will be paying 10% more for their gas and electric overnight from the end of the month, but it is avoidable. Our research shows that there are hundreds of better deals out there, but people need to act now and take control of their energy costs.”
“When Ofgem introduced the price cap in January it was intended to limit the amount suppliers could charge per unit of energy for their standard variable default tariffs. Initially, households on an SVT would have made a small saving as the cap reduced the typical tariff by £76 a year. But that lasted just a matter of weeks as the first review, announced in February, resulted in a £117 price rise from April which is likely to wipe out any saving from the cap for households in 2019.
“The price rise will also hit public confidence in the cap. We now have a situation where the price cap appears to be empowering the big energy companies to raise prices for customers on SVTs, which are among the very worst energy deals on the market. Many consumers will be wondering what is the point of a price cap when it isn’t saving them anything or solving the problem of rising energy costs?”
“The only good news in all of this is that everyone stuck on the price-cap-tracking, big six SVTs, is that they are free to leave at any time. There are no exit penalties for SVT customers, just a big saving when they switch. But to solve the problem of rising energy bills once and for all, consumers need to sign up to an auto-switching service like weflip that monitors prices and continues to automatically switch them to a better deal.”
Commenting on the Energy Price Cap rise Peter Earl, Head of Energy at comparethemarket.com, said “Millions of households are sleepwalking towards a significant price rise in their energy bills if they don’t take action against the revised energy price cap coming into force on the 1st of April. The increase in the cap by on average £117 represents a significant rise in costs for those approaching or already on a standard or default tariff. With 235 fixed energy tariffs coming to an end in the next three months hundreds of thousands more households are at risk of falling into the same trap.”
“The price cap does not solve the underlying issue – millions of people stuck on standard and default tariffs will still be overpaying for their energy. Many were expecting the price cap to protect them from disproportionate price rises but the perception may be very different. The cap is designed to reflect changes in the wholesale energy markets which Ofgem will be reviewing regularly – so there could be more hikes to come. The best way to combat these rises and take control is by shopping around and moving to a competitively priced fixed tariff.”
