Energy bills for 5million households to rise by £47 a year as Ofgem increases safeguard cap on tariffs
The watchdog said the increase means households who qualify for the cap will pay a maximum of £1,136 from October due to higher wholesale energy costs
FIVE million households face paying £47 a year more as Ofgem increases its cap on variable tariffs due to rising wholesale prices.
The rise may pave the way for more energy firms to increase costs.
Ofgem said the increase means households who qualify for the cap will pay a maximum of £1,136 from October.
The cap protects five million vulnerable households from being overcharged, having been extended by a further one million homes earlier this year.
The watchdog said it was increasing the cap due to rising oil prices, which have fed through to wholesale gas prices.
Chief executive Dermot Nolan said: "Any price rise for customers is unfortunate.
How to switch suppliers and save £300
SWITCHING suppliers is the best way you can cut your energy bills. But recent research from MoneySuperMarket found that households are throwing away up to £300 a year by not bothering. Here's what you need to do.
1. Shop around - If you're on an expensive Standard Variable Tariff (SVT) deal you are throwing away up to £300 a year. Use a comparison site like MoneySuperMarket.com or EnergyHelpline.com to see what best deals are available to you.
The cheapest deals are usually found online and are fixed deals - meaning you'll pay a fixed amount usually for 12 months.
2. Switch - When you've found one, all you have to do is contact the new supplier.
It helps to have the following information to hand - which you can find on your bill - to give the new supplier:
- Your postcode
- Name of your existing supplier
- Name of your existing deal and how much you pay
- An up-to-date meter reading
It will then notify your current supplier and begin the switch.
It should take no longer than three weeks to complete the switch and your supply won't be interrupted in that time.
For more advice read our guide on how to switch.
"But while the level of the tariff will rise in October, these customers can be confident that this increase is justified and that their energy bill reflects the real cost of supplying gas and electricity. There are also better deals on the market for those who want to save even more money by switching."
Ofgem also said it was working on a price cap for another 11 million households on "poor value" tariffs, with the measures due to be in place by the end of the year.
It adjusts the level of the tariff twice a year based on a method set by the Competition and Markets Authority.
The rise comes after a series of price hikes from the energy companies over the summer, affecting millions of households.
E.ON, British Gas, SSE, Npower, EDF, ScottishPower and Bulb have all hiked energy prices, blaming wholesale energy costs for the increases.
Consumer groups have warned energy customers about the rising tariffs, saying they should switch to a better deal.
Watchdog Which? has estimated that customers who do not seek out the best deals could end up overpaying by as much as £400 per year.
The Domestic Gas and Electricity (Tariff Cap) Bill will put in place a requirement on Ofgem to cap standard variable and default energy tariffs until at least 2020 to tackle the amount consumers have been overpaying the Big Six energy suppliers.
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The Bill enables the temporary price cap to remain in place until 2023 if conditions for effective market competition are not met.
Yesterday, we revealed how the Big Six energy firms are charging loyal customers more than £350 a year than the best deals on the market.
More than half a million households face paying £241 a year more for gas and electricity if they don't switch when their fixed deal ends.
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