Ofgem has announced that the price cap for standard variable tariffs has risen by £96 and prepayment meter tariffs by £87, which will take effect from 1 April 2021.
This news means that the annual cap for SVTs will be £1,138, up from £1,042, which again, will take effect from the start of April 2021.
The price cap rise paves the way for suppliers to hike their prices, and these announcements are expected in due course.
It has been speculated for some time that the price cap announcement would see an increase, with wholesale energy prices beginning to recover from the slump they took during the first coronavirus lockdown.
For the first time in a while, we’re seeing the wholesale prices of gas and electricity increase, and energy customers could be set to bear the brunt.
Will the price cap changes affect you?
The price cap increases the price per unit of energy you pay, which means your bill might go up if you’re on standard variable tariff (SVT) or prepayment meter tariff, making them the most expensive deals on the market.
The best course of action is to switch to a cheaper deal such as a fixed tariff, which offers a set price and are protected from being affected by the most recent price cap changes.
“Today’s announcement gives suppliers a green light to hike prices for millions of consumers who are already struggling with higher bills due to lockdown restrictions.
“The number of households in energy debt to their electricity provider has already hit a five-year high, with 777,000 owing money to their provider between July and September last year – the highest figure since 2015 . This price cap rise is a hammer-blow for customers and will only increase the surge of energy debt this year across the country.
“It’s particularly unfortunate that price rises sanctioned by the cap will disproportionately affect the most vulnerable groups in society, including the elderly and low-income families.
“Although suppliers will be allowed to raise default tariffs prices, they do not have to. We call on providers to hold off any price increases to help households continuing to be hit hard by the pandemic, as hopes rise for the easing of restrictions from the vaccine roll out. Even just holding off for a few months could help with the financial survival of millions of consumers nationwide.
“While the price cap affects some of the most expensive deals on the market, fixed deals are unaffected and switching to a competitive fixed tariff will lower bills and lock in prices for 12 months or more. However, rising wholesale costs have increased the prices of the most competitive tariffs on the market by 17% since last April, so consumers are strongly advised to switch and fix sooner rather than later.”
Compare and switch to save
Use our comparison site to browse some of the best energy deals on the UK market right now and get ahead of the price cap.
To get started, just enter your postcode followed by some usage details and we’ll be able to show you a list for you to browse.