Energy Price Cap Reaction

“Ofgem has confirmed that from April energy bills will increase by up to 6.4% – the third consecutive quarterly rise.

“Households with a prepayment meter will see their annual energy bills increase by £113, from £1,690 to £1,803, while bills for the average dual fuel household paying by direct debit will go up from £1,738 to £1,849. Households on a standard credit tariff will see the biggest rise in energy costs over the year, increasing by £118 to £1,969.

“While we were expecting the price cap to rise in the second quarter, it is more than we were hoping for. Since July last year, fuel bills have been heading in a worrying direction, and we now know that households will have at least three more months of higher bills to contend with.

“As a result, we expect to see more people turning to charities, such as Fuel Bank, and other support agencies for help to keep their gas and/or electricity supply on or keep prepayment meters topped up.

“Amid the gloom of higher energy prices there are, however, a few chinks of light for vulnerable and low-income households. Today’s announcement by the Government that it plans to widen the eligibility criteria for the Warm Homes Discount next winter will mean around 2.8 million more homes will receive it.

“Under the Government’s proposals, all households across Great Britain in receipt of means-tested benefits would get the £150 electricity bill rebate, taking the total number of households that receive it to an estimated 6.1 million.

“This week’s announcement will mean people who live in well-insulated homes but still can’t afford to top up their prepayment meter will get the discount. We see the impact of living in a home without heat or power and the very real affordability challenge that many face, so we are pleased the Government has listened and acted.

“With energy debt currently standing at £3.8 billion, we welcome the extension of the debt allowance scheme, which supports suppliers in helping millions of consumers get on top of their bills and stay on supply. Not only is this crucial for reducing the UK’s energy debt, which is at a record high, it prevents consumers from being chased for debts that they’ll never be able to repay and the mental anguish this causes.

“We also welcome Ofgem’s proposals to improve the standard of service from suppliers when supporting customers that are struggling to pay their bills.

“Consumers should have very clear expectations as to how their supplier will treat them if they are in debt. However, this is not always the case due to inconsistencies between and, sometimes, within suppliers.

“For charities like Fuel Bank, it will give us confidence in advising clients to speak to their supplier knowing there is a minimum level of service they are required to deliver.

“Furthermore, we have long called for suppliers to be more proactive in their use of the data they hold and would like to see them reaching out to customers when they receive early warnings that they may be struggling with affordability.

“In the short-medium term, while energy bills remain high, the more support that can be provided to vulnerable households the better. Long-term, there is still a lot more that needs to be done, but this is an encouraging start.”