For the 11 million on default direct debit tariffs, bills will rise to a record average of £1,277 a year. For the four million on prepayment meters, the rise is even higher. Regulator Ofgem confirmed it would raise the cap on energy prices next month, allowing companies to charge more because of an increase in wholesale prices.
Guy Anker, deputy editor at consumer website Money Saving Expert, said: “The key is to act to avoid a rip-off.
“There’s nothing to fear from switching. Your supply isn’t cut off, facing busting bills and it’s the same gas, electricity and safety. Big savings are possible if you urgently switch. Put your details into one of the many energy comparison websites, as they’ll spit out your top deal.”
Ofgem said it was allowing suppliers to increase bills to record highs because they needed to recoup a surge in wholesale costs.
The inflation-busting hike comes into effect from October 1. Switching providers can take three weeks, so experts warned households to act now.
The energy price cap is a tool for controlling the cost of gas and electricity in the UK.
The headline rate changes twice a year and is expressed as an annual cost based on a typical consumer using a medium amount of gas and electricity.
Ofgem’s energy cap increased to £1,138 from April 1 this year in a move that affected around 11 million households. That amounted to a £96 rise for medium users of energy. But six months on, the cap will rise again, this time by 12 per cent to its highest ever level.
The four million customers with a prepayment meter will be hit harder. For those, the cap rose to £1,156 in April ‑ an increase of £87. From next month that cap will rise 13 percent to £1,309 ‑ an increase of £153.
And, in a further blow, increases in wholesale energy prices could see Ofgem allow suppliers to increase prices further, with a £100 surge not ruled out.
All major providers are set to ramp up prices, with British Gas the latest to follow rivals by upping bills by the maximum allowed.
British Gas, owned by Centrica, says it will delay the impact for those standard tariff customers who pay by monthly direct debit, probably until February.
EDF Energy was the first of the Big Six suppliers to say it would raise its average standard variable tariff for direct debit payers by the maximum allowed.
Comment by Guy Anker
An energy bill hike shock will shortly hit millions of households ‑ but big savings are possible if you make a rapid switch.
With typical use, anyone on already expensive standard tariffs from giants such as British Gas and EDF will pay an average £139 per year more from October 1.
That’s because the energy regulator Ofgem is raising the cap firms can charge for these rates due to the soaring cost of energy suppliers have to pay.
Yet you can turn down the heat on those hikes by plugging your details into one of the many energy comparison websites.
Typically, you’d save an average of £190 over the next year by bagging the cheapest deal.
Use this clarion call to act now as it can take three weeks for the switch to complete ‑ which is how long you have until the price rises.
Plus, today’s cheaper deals could be pulled soon due to the ghastly market conditions.
If you’re already on a fixed rate, you won’t immediately be hit by October’s rise, though if you roll on to a standard tariff when it ends, you will face the pain. Rises are coming for millions at some point.
If your cheap fix is about to end, even today’s top deals may cost more as the price of energy has jumped across the board.
But by moving to the cheapest deal you will at least pay less than if you did nothing on the new, pricier rates.
What is more, moving to a cheap fixed rate is safest, as we expect the price of variable rate tariffs to rise. Also, try to find fixes with no or low exit fees so if cheaper deals appear later, you are free to bag them.
Despite some misconceptions, there’s nothing to fear from switching. Your supply isn’t cut off, and it’s the same gas, electricity and safety.
Some on certain benefits can also get £140 off their bills, regardless of tariff, under the Government’s Warm Home Discount Scheme. Check your eligibility with your supplier.
The key, whoever you are, is to act to avoid a rip-off.
Guy Anker is from moneysavingexpert.com