Home Business News Millions face soaring bills as Ofgem announces a 54% increase as energy cap rises

Millions face soaring bills as Ofgem announces a 54% increase as energy cap rises

by LLB Finance Reporter
3rd Feb 22 11:30 am

The energy regulator Ofgem have increased their price cap by 54% which will affect millions of households.

Around 22 million customers who are on variable gas and electricity tariffs will be hit with a rise of £693 which starts from April.

Wholesale gas prices are around four times higher and households will feel the pinch as National Insurance, higher food prices and rising interest rates are all soaring.

It is expected that the Chancellor Rishi Sunak will announce that customers can get a £200 rebate from their energy suppliers which will help with the rising cost of living.

Jonathan Brearley, chief executive of Ofgem, said, “We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure energy companies support their customers in any way they can.

“The energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event, and Ofgem’s role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas.

“Ofgem is working to stabilise the market and over the longer term to diversify our sources of energy which will help protect customers from similar price shocks in the future.”

Dr David Deller, a senior research associate at UEA’s Centre for Competition Policy (CCP), said, “A large rise in the energy price cap is likely to have a significant impact on the affordability of energy for many households, particularly those on low incomes.

“Research by the Centre for Competition Policy shows that lower income households spend a considerably higher proportion of their total expenditure on energy than households further up the income distribution.

“This means energy bills are far more prominent to them and, more importantly, they are more likely to face difficult choices regarding whether to reduce their energy consumption or cut back on other spending.

“In the long-run perspective, it seems likely that energy affordability difficulties will reach a level last seen around 2013 or possibly in the late 1980s.”

Tashema Jackson, energy expert at energyhelpline.com said, “This is a body blow for the millions of households that will see their annual energy bill hit record highs – with the £693 increase taking the average annual energy bill to £1,971.

“Consumers, who have already seen their energy bills at record levels over the past six months, will be hit by this 54 percent hike alongside a number of other cost of living increases – including tax rises and food inflation.

“With around 22 million of households affected, this is the single biggest bill increase in living memory, and will leave many people up and down the country with the stark choice of heating or eating.”

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