Several UK energy suppliers have said they will raise the price of their standard gas and electricity tariffs to the maximum limit set by the energy regulator for the coming winter.
Ofgem’s price cap will climb to its highest level since it was introduced in early 2019 owing to a surge in global gas market prices. The regulator said that for 11 million households who pay by direct debit, energy bills would increase from an average of £1,138 a year to £1,277 from October.
For another 4 million households who use prepayment meters – who are typically more socially vulnerable – the average energy bill will rise from £1,156 to £1,309, a difference of £153.
Eon UK and Scottish Power have raised the price of their standard gas and electricity tariffs by 12% to an average of £1,277 a year. Ovo Energy, the UK’s second largest energy supplier, will raise the price of its standard dual-fuel energy tariff by 12.25% to an average of £1,276.49 a year from 1 October, just 51p shy of the cap set by Ofgem this month.
British Gas, the UK’s largest energy supplier, has yet to announce a price increase.
The flurry of energy price rises began last week with EDF Energy announcing it was putting up prices by 12% to an average of £1,277 a year for its 2 million customers on standard dual-fuel tariffs.
Tom Lyon, the director of energy at energyhelpline.com, an energy switching site, said that although the Ofgem price cap sets the maximum rate for energy bills, “there is no requirement on energy suppliers to raise prices on standard variable tariffs to the highest level possible. And given we are about to enter the coldest part of the year, any increase in energy bills will be an even bigger blow to hard-pressed customers.”
The increases will mean millions of homes will face having to pay some of the highest energy bills for the past decade, reigniting calls for the government to establish a social tariff for the most financially vulnerable that is priced at a discount to the standard energy price cap.
Energy switching sites have seized the opportunity to encourage households to use their services to move to cheaper fixed-rate deals before the standard tariff hikes take effect. But many of the best deals have already been pulled from the market owing to a surge in energy market prices in recent months.
“We have already started to see the cheapest tariffs being removed by suppliers, and with every passing week the best-value fixed deals are going up in price,” Lyons said. “Wholesale energy prices have continued to increase sharply and the trend of the lowest-priced deals being replaced by more expensive ones could be set to continue.”