No joke for energy consumers as price cap soars on April 1 – Forbes Advisor UK
Millions of households will pay more for their electricity and gas from April 1, unless they abandon standard variable tariffs (SVR) or “default” tariffs.
Bills will rise in line with industry regulator Ofgem’s new energy price cap, which dictates the maximum amount per year that an energy supplier can charge customers on these tariffs.
This Thursday, April 1, the ceiling will increase as follows:
- typical prices will increase by £ 96 per year from £ 1,042 per year to £ 1,138 per year for customers who are on a default / SVT tariff (estimated at 11 million households)
- typical prices will increase by £ 87 per year, from £ 1,069 per year to £ 1,156 per year for prepaid customers (around four million households).
Figures quoted are for typical families – the actual level of the cap and the amount of invoices received will vary depending on usage.
Most energy providers have already announced increases to their standard variable rate or “default” tariffs, and most are increasing their prices to the maximum allowed by the cap.
Households that have not changed for two years or more or who have never changed are likely to benefit from variable rate tariffs by default.
Fixed rate alternative
The cheapest alternative to a variable rate tariff is usually a fixed rate contract, where the price per unit of energy is locked in for a fixed period – normally 12 or 24 months.
Ofgem says most of the increase in the price cap is due to the rising cost of energy in wholesale markets coupled with strong winter demand.
A provision has also been made for losses suffered by suppliers who have incurred bad debts due to the inability of customers to pay their bills due to the impact of the coronavirus.
Ofgem updates its price cap twice a year to reflect changing market conditions. The April 1 change is notified in February. We will hear in August where the price cap will be held on October 1.
* £ 497 is the minimum savings of the top 10% savers who switched through our partner of choice energyhelpline between November 1, 2019 and April 30, 2020.