UK energy bills set to rise!
In a bid to protect the cashflow of UK energy suppliers, Ofgem have proposed lifting the price cap on standard variable energy tariffs. This is in response to an increasing number of UK households in payment arrears.
Since February of this year over 500,000 households have fallen behind on their energy payments taking the total number of UK households in arrears to more than 2 million.
Citizens Advice estimate that on average, households in debt to the energy companies are in arrears of £760 for electricity and £605 for gas. Their findings have also found that of homes who use prepay energy meters, 16% (700,000) have been unable to afford a top-up since March.
It’s estimated that 7 million homes will struggle to pay their winter energy bill this year.
As a result, Ofgem have proposed an increase to their energy price cap. If approved, standard variable rate tariffs would increase by £21 a year (for dual fuel tariffs) in April 2021. This increase has been proposed to support energy providers who have been put in financial difficulty by the rising number of customers unable to pay their bills.
On top of an increase to the energy price cap, households are expected to experience a rise of more than £100 for their energy bills due to increased usage while staying at home this winter.
The proposed increase to the energy price cap isn’t the only increase we can expect to our energy bills in 2021. Ofgem has issued a further warning the cap may need to be increased again in the spring of 2021 as wholesale energy prices begin to recover from historic lows earlier this year. This statement comes just months after Ofgem lowered the price cap by £84.
If you are struggling to keep up with your energy bills, there is some good news.
Voluntary measures put in place in March to support households through the first wave of the pandemic have now become mandatory under the regulator’s licence conditions. Meaning, energy providers have to provide customers struggling to pay with “realistic” debt repayment plans or emergency credit for those on prepay energy meters. This is in an effort to prevents UK being left in dark or without heating this winter.