Households across the UK on standard variable tariffs (SVTs) and prepayment meters will see record price rises on their energy bills from October, as Ofgem reveals details of its new price cap.
Upwards of 11 million homes on SVTs may face annual bill increases of £139 with the cap going from £1,138 to £1,277, while a further four million prepayment meter customers could see an increase of £153 as prices go from £1,156 to £1,309.
The cap itself sets maximum unit rates and charges for suppliers, but the exact amount your bills will go up by will be down to how much each energy provider decides to charge. However, the good news is that those affected can avoid the looming price hikes by running an online energy comparison and switching to a cheaper deal.
- Avoid rising energy bills and find the best deals in your area now
Why are our energy bills going up?
Ofgem has explained that there are a number of factors behind the new cap, but rising wholesale costs have been cited as the main driver.
These costs were also a key part of the £96 increase on the previous price cap in April, but now the combination of several other contributing aspects has exacerbated the situation, and driven up wholesale costs even more.
This includes:
- A lower supply of gas imports because of the pandemic
- Increased demand from Asia
- The extended cold spells over last winter and spring
- Subsequent lower-than-normal amounts of gas left in storage across Europe
Different ways to switch and save
The new cap will come into effect from the 1st October this year and will cover the following six months until the end of March 2022. Ofgem will review the cap again during this period – notably across the winter months where the UK’s energy demand will also go up – for its next update in April 2022, but there’s no guarantee that we will see prices drop.
This again makes another strong case for those on SVTs and prepayment meters to switch to a fixed and more affordable energy tariff while they can. It is also an approach that is being actively encouraged by Ofgem, with its chief executive, Jonathan Brearley telling the BBC: "You don't have to live with this tariff. The price cap is a backstop. We'd encourage any customer, particularly those struggling to pay their bills, to contact their supplier, and get access to a wide-range of help and support."
However, in addition to contacting your supplier directly and asking about a different tariff, as aforementioned, you can also compare the markets online and see what the best energy deals are near your location.
Online energy comparison services can even give you a breakdown of the different tariff options, including those which offer 100% renewable electricity or a greener fuel mix. Plus, you can see how much you could save on your energy bills and get a better idea of which providers are considered to be the best energy suppliers right now.
The whole process can be done quickly and easily. All you’ll need is a few personal details about you and your energy use, and in just a few minutes, you could find and switch to a tariff that sees you making substantial savings.
