The price cap on energy bills started in 2019 (Gareth Fuller/PA)
(Picture: PA Wire)As caps go, it is not exactly watertight. Ofgem, the energy regulator, announced today that bills for 15 million households will increase to a record high from October, as a result of a rise in wholesale prices.
The figures are enough to send a chill down spines across the country. Those on default tariffs paying by direct debit will see a rise of £139, from £1,138 to £1,277.
Pre-payment customers will see costs jump £153, from £1,156 to £1,309. The increases are linked to a 50 per cent rise in energy costs in the last six months, which Ofgem attributes to “a recovery in global demand and tighter energy supplies”.
The price cap — an Ed Miliband era policy co-opted by Theresa May in government — was part of a commitment to fix the UK’s “broken energy market”. Yet in practice it has not matched the rhetoric.
This most recent increase follows quickly on the heels of the last one in April, when wholesale prices pushed up the price cap by £96.
Charities are warning the latest rise is contributing to a perfect storm for families this autumn, coming as the £20-a-week Universal Credit uplift and the furlough scheme come to an end.
It also demonstrates the real-world impact of inflation on families, who will find their hard-earned money stretching less far right across the economy.
This latest cap rise demonstrates two realities. The first is that there is no shortcut or easy solution to deliver cheap energy. The second is, as Ofgem itself advises, consumers should shop around if they want to secure the best deal.
Finally, it demonstrates the importance of boosting energy efficiency across homes in Britain, the surest fire way to keep individual energy costs down — which also confers significant environmental benefits.
