The energy bills of millions of households are to rise by 6.4% from April 1 when Ofgem increases its price cap for a third consecutive quarter. The regulator said the increase, which will raise the average bill for households in England, Scotland and Wales on a standard variable tariff from the current £1,738 a year to £1,849, followed a recent spike in wholesale prices.
The rise will equate to £111 for an average household per year, or around £9.25 a month, over the three-month period of the price cap. This is 9.4% or £159 higher than this time last year but £531 or 22% lower than at the height of the energy crisis at the start of 2023.
Ofgem chief executive Jonathan Brearley said: “We know that no price rise is ever welcome and that the cost of energy remains a huge challenge for many households. But our reliance on international gas markets leads to volatile wholesale prices, and continues to drive up bills, which is why it’s more important than ever that we’re driving forward investment in a cleaner, homegrown system.
“Energy debts that began during the energy crisis have reached record levels and without intervention will continue to grow. This puts families under huge stress and increases costs for all customers. We’re developing plans that could give households with unmanageable debt the clean slate they need to move forward.”
Simon Francis, coordinator of campaign group the End Fuel Poverty Coalition, called for billions more in support for vulnerable customers. He said it was “crucial to provide support for vulnerable households struggling with energy costs now”, calling for £13.2 billion of support at the Government’s upcoming spending review.
“The big question will be how do we pay for these improvements in support. Both Warm Home Discounts and debt relief are traditionally funded through our energy bills.
“Yet the energy industry makes billions of pounds in profit every year and it beggars belief that Ofgem is increasing the profit allowance for suppliers in the current climate. For now, the advice for households is to make the most of existing energy efficiency schemes and if customers do shop around for a lower energy bill, they must use their own energy usage on price comparison sites.”
Steve Vaid, chief executive at the Money Advice Trust, the charity that runs National Debtline, said: “The impact of high energy prices is clear to see. Energy arrears are now the second most common debt we are helping people with, behind only credit cards.
“This latest price rise will only add to the challenges many people face in keeping up with their bills. Ofgem must press ahead with their plans for a Help to Repay scheme, to bring energy debt down, while the Government must urgently bring in targeted bill support through an energy social tariff. Anyone struggling with their energy bills, or worried about their finances, should contact a free debt advice charity, like National Debtline.”
David Buttress, chief executive of Ovo Energy, called for a social tariff to help vulnerable customers. He said: “With bills rising again the Government, regulator, and energy companies must work together to introduce a social tariff to shield the most vulnerable from high prices.”