We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
Annual bills are already set to increase by £139 this month ‑ but there are fears they will rise even higher because of the surging cost of gas and electricity. Prices have gone up because energy regulator Ofgem has lifted its cap on standard variable tariffs for the next six months.
But experts say the cap ‑ which is supposed to protect people from excessive rises ‑ does not factor in the huge swing in wholesale costs and consumers face another hike in April, when Ofgem’s next price cap review is due.
Last night they urged the Government to act fast to protect the most hard-up households.
Richard Neudegg, head of regulation at Uswitch.com, said: “The increase customers see on their bills from October only reflects the start of the rise in wholesale energy prices and does not include the full hike that caused the recent crisis.
“There is a retrospective lag to the price cap system, which means people won’t have the current spikes in wholesale costs passed on to them until next April. So we have a ticking time bomb on our hands.”
Mr Neudegg added that the increase in the price cap means the targeted help being offered to struggling households ‑ £140 under the Warm Home Discount ‑ has been rendered “meaningless”.
And he warned: “The Government needs to act quickly to provide better protection for the most vulnerable over the coming months.”
GoCompare’s energy spokesman, Gareth Kloet, said bills could also be pushed up if more energy suppliers go under.
Nine challenger energy companies ‑ those that typically offer the best deals ‑ have already gone bust because of the surge in wholesale costs Mr Kloet said: “Ordinarily the cap is there to protect consumers from over-paying on their energy bills.
“But at the moment, it’s forcing all energy providers to supply gas and electricity to their customers at a financial loss.
“Only those businesses with very deep pockets and large reserves can sustain this, which is having the negative effect of driving out competition in the market.
“We have already seen a number of smaller energy players close their doors and the bigger providers withdraw their tariffs from sale.”
Households are usually encouraged to shop around for the best energy deals.
But Mr Neudegg warned that the rising costs will end up being passed on to consumers, so switching suppliers is not likely to help with their bills.
He said: “The best advice right now is to hold tight if you’re on a standard variable tariff, as it’s unlikely there will be a better value deal.”
Source: Read Full Article