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Ofgem energy price cap increase response

February 5, 2021

Energy regulator Ofgem has today announced changes to the price cap on default energy tariffs.

The changes, which come into effect on 1st April 2021, mean customers paying for gas and electricity by pre-payment meter will see their costs rise by £87, from £1,070 to £1,156 for average consumption.

According to Ofgem, the increase is primarily driven by higher costs to supply energy, particularly wholesale energy costs.

Matthew Cole, Fuel Bank Foundation chair of trustees, said the price cap increase couldn’t have come at a worse time for vulnerable consumers.

Whilst we understand the rationale behind price cap rise, for people on pre-payment meters £87 is a significant increase and could result in more people living in fuel poverty, unable to pay for gas and electricity to heat and power their homes and at risk of self-disconnection. Household finances are already under increased pressure as a result of the Covid-19 pandemic, with higher food and fuel costs due people having to stay at home, on top of the usual seasonal increase in energy usage. For families juggling already stretched budgets, the prospect of a price increase in April will be of great concern and worry. Fuel poverty can’t be tackled by the energy industry alone. It needs a coordinated effort by energy companies, government, industry bodies, charities and other stakeholders to come up with a sustainable, long term solution to the problem.
Matthew Cole, Chair of Trustees - Fuel Bank Foundation

Last year, Ofgem strengthened protections for vulnerable consumers. The new measures mean energy suppliers must provide emergency credit support to PPM customers who are struggling, and that debt repayment plans are achievable and based on the customers’ ability to pay.

Vulnerable consumers may be eligible for extra help with their energy bills or services, such as payment breaks, suspending credit meter disconnections, and be eligible for schemes like the Winter Fuel Payment or Warm Home Discount rebate.