Don’t be a fuel fool
According to the shopping comparison magazine, Which? energy customers could end up paying more for gas and electricity from April 2019 under the new price cap than they did before a price cap was in place.
A £117 increase to the energy price cap was announced earlier this year. It started on 1st April, allowing energy companies to raise the prices of their standard or default tariffs and affecting 11 million people. If energy companies raise their price to the maximum allowed under the cap, millions of customers could face bills as high, or even more expensive than before the price cap.
Ofgem say that prices are rising because Ofgem is allowing suppliers to charge more to cover the higher wholesale costs they face owing to the higher global price of oil. Wholesale costs account for more than a third of a typical energy bill. The regulator considered the costs faced by suppliers in the six months to the end of January when setting the new cap from April. About £74 of the £117 increase in the default tariff cap is due to higher wholesale energy costs, it said, with costs of transporting energy and environmental costs also rising for suppliers.
Alex Neill, from consumer group Which?, said: “This eye-watering increase to the price cap will be a shock to the system for people who thought that it would protect them from rising bills.”
“Energy suppliers have traditionally been the ones blasted for blaming price rises on wholesale costs,” said Richard Neudegg, from price comparison site Uswitch. “Now, shamefully, Ofgem is doing the same thing, as the reality of energy prices catches up with the political hype.”
But Lawrence Slade, chief executive of Energy UK, which represents suppliers, said that energy companies were facing “drastically rising costs” which were outside their direct control so it was correct for Ofgem to reflect that when setting the cap.
There is obviously disagreement over why this rise has happened and if it is justified, but the important thing for our readers is to protect themselves from outlandish fuel price tariffs. It’s more important than ever to make sure you’re on a good energy deal. At the moment, you could save £163 per year by switching from a tariff at the level of the price cap to the cheapest deal on the market. If firms raise their prices to the level of the new cap post April, then you could save £280.
Age Concern Liverpool & Sefton advised Mr D. to shop around when he was told that his dual fuel bill would be rising by almost £400 this year. Mr. D used the uSwitch.com site and managed to save almost £200 compared to what his current supplier was going to charge. Which? Also supply a similar service at switch.which.co.uk and so does moneysupermarket.com. Please do shop around, you could save hundreds of pounds.