Some of the UK’s most vulnerable households could see an increase of as much as £47 a year in their energy bills after Ofgem increased the cap on prices for the second time this year, as a result of higher wholesale costs.
The UK industry regulator said the increase that is set to be introduced in October means typical consumers of electricity and gas would see the safeguard tariff rise to £1,136 a year. Although it said that the 5 million consumers expected to be affected will still be better off, despite the rise, then if there was no cap.
“Any price rise for customers is unfortunate,” said Dermot Nolan, Ofgem chief executive. “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.”
The hike in the safeguard tariff is largely due to the rise in global oil prices, which has been filtered through to the wholesale gas market, according to Ofgem.
Rik Smith, energy expert at uSwitch.com, said: “This is a stark reminder that even when there is a cap in place, prices can still rise,” he added: “The only way pre-payment customers can truly protect themselves is to switch to a cheaper deal or fix their tariff for additional security.”
The price cap was first introduced in April 2017 after it was found that customers with pre-paid meters were paying poor rates and had to be protected.
Ofgem adjust the safeguard tariff two times a year to ensure they are in line with the primary costs of energy supplies.