From 1 April, the energy price cap will be increasing for around half of Great Britain’s population – by £96 to £1,138 for default customers and by £87 to £1,156 for pre-payment customers.
I know the increase comes at a time when many are facing financial hardship.
It’s clear too that the impact of COVID-19 will be felt for some time to come and certainly after lockdown restrictions are lifted.
My message to anyone struggling to pay their energy bill, particularly those worried by rising prices, is that there is help available for you.
Why prices are going up
The price cap protects households who have not switched energy suppliers by ensuring they pay a fair price for their electricity and gas.
When wholesale prices fell sharply last year in the wake of the first lockdown, the level of the price cap fell by £84 in October to its lowest level yet for the last winter period.
The demand for energy has since recovered, which will push the level of the cap back to pre-pandemic levels from 1 April.
Although the price cap is increasing, the price cap is still saving households an estimated £75-£100 per year.
Anyone struggling to pay their energy bill should get in touch with their supplier as soon as possible to access the package of support available.
Under Ofgem rules, suppliers are required to put those who are behind on their bills on affordable repayment plans, provide emergency credit to customers struggling to top up their pre-payment meters and should not disconnect their customers. Under our rules suppliers are required to be proactive in identifying and offering support to customers in payment difficulty.
There are also a range of schemes in place. Under the government’s Warm Home Discount scheme, which Ofgem administers, eligible customers who are in fuel poverty get an annual rebate of £140 on their energy bill. Payments of between £100 and £300 are also available under the Winter Fuel Payment for older people.
Customers should ask their supplier if they are eligible for such schemes as payment is not always automatic. If they do not qualify, suppliers can point to other ways in which they or other organisations can help.
Millions of people of people are benefiting from this support. For example in December, around one million customers were on a repayment plan or energy bill holiday.
Emergency credit of up to £50 was used 1.5 million times by prepayment meter customers per month in November and December. And in the winter of 2019/2020, suppliers paid the £140 Warm Home Discount to over 2.2 million customers.
Customers in vulnerable circumstances
Consumer groups and charities, such as Citizens Advice and National Energy Action, can also provide additional support and advice, especially for those in vulnerable circumstances.
Sarah*, a single parent, said she used to “scrape by” as a carer on a zero hours contract with universal credit topping up her salary.
Then she lost her job in November, leaving her struggling to pay her energy bill and for other household essentials. She suffers panic attacks and was embarrassed about her financial situation.
But after contacting National Energy Action, she plucked up the courage to contact her supplier. She discovered she was eligible for the £140 Warm Home Discount rebate and her supplier put on a reduced and affordable repayment plan which help put her back in control of her finances.
Households protected by the price cap pay a fair price for their electricity and gas. But consumers who want to avoid the increase on 1 April can shop around and save around £100.
Not everyone wants to or feels able to switch supplier. We know that those in vulnerable situations, in debt, or on pre-payment meters are least likely to engage in the energy market.
These customers should contact their supplier and ask to be moved to a cheaper fixed tariff which should still result in significant savings on their energy bill.
My message to anyone struggling to pay their energy bill is – there are steps you can take to improve your situation. Contact your supplier about the support that is available or ask to be put on a cheaper deal.
Over the last difficult year, we have worked closely with government and industry to protect consumers, especially those in vulnerable circumstances like Sarah and millions like her – and I promise we will continue to do so.