A complete con!
Energy price cap to rise by £120 … just weeks after it was brought in
THE price cap on gas and electricity tariffs is being hiked by nearly £120 just weeks after it was introduced – leaving 15million households ‘utterly conned’ and facing higher bills.
Two years after concerns were raised that the public was being ripped off by the big suppliers, energy watchdog Ofgem brought in the cap on January 1 and promised it would save customers an average of £76 a year.
But yesterday it said it will lift the limit in April by £117 to £1,254 a year for 11million households on standard variable gas and electricity tariffs. Another four million customers with prepayment meters will see their cap rise by £106 to £1,242 a year.
Richard Neudegg, head of regulation at price comparison site uSwitch, last night said it was now ‘crystal clear’ that households were never going to make the savings they were promised. He added: ‘People could be forgiven for feeling that they have been completely and utterly conned by the Government’s energy price cap.
‘Ofgem proudly proclaimed that the cap would cut bills by an average of £76 a year when it came into force at the beginning of January, but just weeks later it is announcing a jaw-dropping increase. Standard tariffs were a bad deal before the cap came in, and they are still a bad deal now.’
The new cap, which will last six months, is blamed on rises in wholesale costs and will add £1.7billion to household energy bills.
Alex Neill, of 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.’
And consumer campaigner Martin Lewis, founder of the Money Saving Expert website, described the price cap as a ‘damp squib’. He said: ‘To put this in context, the new average rate of the cap will be £1,254 a year. That’s actually £34 more than firms were charging in December before the cap launched. And as most of the “big six” providers snuggle their prices right against the cap, people will likely see that increase.’
Ofgem insisted those affected will still pay a ‘fair price’ as the rise reflected a genuine increase in underlying wholesale costs, rather than profiteering by energy firms. It said even after the increase, those on default deals will still be saving around £75 to £100 a year on average thanks to the cap.
Chief executive Dermot Nolan said: ‘We can assure these customers they remain protected from being overcharged for their energy. We have gone through everything and any costs that are being passed through are utterly justified.’
Claire Perry, the minister for energy and clean growth, added: ‘We were clear when we introduced the cap that prices can go up but also down.’
The next price cap review will be carried out in August for the six-month winter period which begins on October 1. But campaigners are now urging people to switch provider or tariff before the new cap is put in place in April.