Could it be a sign that it’s time to switch energy suppliers?
Electricity and gas regulator, Ofgem, announced in February 2021 that the energy cap would be raised beginning April 1.
They claim that the price cap will revert to “pre-pandemic levels.”
After a dramatic drop last year, wholesale energy prices are quickly rising again.
The price cap has fallen to its lowest level, which was £84.
However, as the UK attempts to gradually regain its footing, energy demand has increased significantly, causing wholesale prices to rise as well.
What is an energy price cap?
The energy price cap was recently introduced by Ofgem to limit the price energy suppliers charge per unit of energy.
Its goal is to protect consumers from steep price hikes, particularly those on high-cost default and prepayment tariffs.
Fixed-rate tariffs are not eligible for energy price caps. This type of tariff offers competitive rates, anyway
Learn more about the energy price cap here.
How high is the current energy price cap?
The energy price cap is at least 10% higher than the previous year’s price cap.
The price cap for default tariff energy customers will range between £96 and £1,138.
Prepayment meter users, on the other hand, will face rates ranging from £87 to £1,156.
If you’re looking to switch energy suppliers, now is the time.
While the energy price cap protects those who have not switched energy suppliers, it discourages them from doing so in the first place. This is problematic because consumers may become unaware that they can save significantly more by switching to a different energy supplier.
The regulator adjusts the price cap level twice a year.
As long as the price represents the costs of producing electricity, it may rise or fall dramatically.
According to the chief executive of Ofgem, Jonathan Brearley,
“Energy bill increases are never welcome, especially as many consumers are struggling with the impact of the pandemic. We have carefully scrutinised these changes to ensure that customers only pay a fair price for their energy.”
Ofgem aims to assist all types of energy consumers in the UK, especially those who are experiencing difficulties as a result of the pandemic. They are encouraging energy suppliers to treat their customers fairly by setting competitive prices.
Ofgem has approved a £23 claim from customers to cover higher levels of bad debt. Because of this, suppliers will be able to continue supplying energy with ease.
Energy suppliers must offer emergency credit to customers who are in a precarious situation.
Consumers who are unable to top up their pre-payment meters or who are late on their payments would be able to make ends meet with the assistance of emergency credit.
Available aid for energy consumers:
- Ofgem requires energy suppliers to provide emergency credit and better repayment plans for consumers that are struggling to pay their bills or are sinking in debt.
- If customers are having difficulty paying their energy bills, their supplier should still be willing to work with them. If you are one of the affected customers, please contact your energy provider as soon as possible. Depending on the situation, a better game plan may be on the table – eligibility may vary. You can read more about this by visiting Ofgem’s official website. Extra assistance includes payment breaks, suspension of meter disconnections, and other schemes.
- Consumers who are in vulnerable situations can seek advice from Citizens Advice.
- Switching energy suppliers can be a simpler task with the help of Ofgem. Start comparing business energy quotes by using our Price Comparison Tool to snag the best deals in your region.
More updates on the price cap 2021
The latest changes for the price cap was announced in February and took effect on April 1.
The latest wholesale energy costs greatly affect the price cap. This is how Ofgem calculates it.
- All members of the Big Six have Increased their prices in accordance to the new price cap level. British Gas, E.on, Npower, EDF, and Scottish Power now charge £1,138/yr for fixed tariffs. While SSE charges £1,137 per year for fixed tariffs.
- 150 fixed rate tariffs are priced below the price cap
- 42 variable rate tariffs are currently priced below the price cap.
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