Millions of homes facing highest energy bills in a decade
Millions of consumers will be forced to pay some of the highest energy bills for the last decade due to a rise in wholesale prices, the UK’s energy regulator has announced.
From October, default tariff customers paying by direct debit will see an increase of £139 from £1,138 to £1277, while those on prepayment meters will see a rise of £153 from £1,156 to £1309.
Around 15 million households are expected to be affected by the change.
The energy regulator said the increase was driven by a rise of more than 50 per cent in energy costs over the last six months, with gas prices hitting a record high as inflation jumped amid the easing of pandemic restrictions.
The increase comes on top of a £96-a-year increase to the price cap from April and will be reviewed again in six months.
Charities warned the increase, which will take effect in October, “could not be coming at a worse time”, as millions of homes prepare for the government’s £20-a-week cut to universal credit and the end of the furlough scheme.
James Plunkett of Citizens Advice said the price hike could lead to a “perfect storm” for families in the autumn and called on the government to rethink its planned cut to UniversalCredit.
He said: “With bills rising and incomes falling, many families will find it hard to escape. For many, debt will be the inevitable consequence.”
Jonathan Brearley, Ofgem chief executive, said: “Higher energy bills are never welcome and the timing and size of this increase will be particularly difficult for many families still struggling with the impact of the pandemic.”
He urged those who are struggling to pay their bills to get in touch with their supplier to access the help that’s available and, if possible, shop around for a better deal.
The hike in energy prices comes after the government’s infrastructure advisor warned that families will have to pay up to £400 more a year to cover the cost of Boris Johnson’s pledge to meet net-zero by 2050.
Analysis for the National Infrastructure Commission suggests the poorest tenth of households will pay an extra £80 a year by 2050, rising to £400 for the richest tenth. However, it says that by this time the average household will have an income £15,000 higher than today.