Energy prices will rise for 15 million households by at least £139 to a record high from October, the UK’s energy regulator has announced.
Customers on default tariffs paying by direct debit will see the sharpest jump in prices since the cap was introduced, taking average bills to £1,277, Watchdog Ofgem said.
Why are energy bills increasing?
The increase has been driven by a rise of more than 50% in energy costs over the last six months, with gas prices hitting a record high as inflation jumped amid the easing of pandemic restrictions, Ofgem said.
Pre-payment customers will see costs rise by £153, from £1,156 to £,1309.
Households that shop around and sign up to fixed plans with suppliers are not subject to the price cap. Customers are often able to save hundreds of pounds by choosing a fixed tariff over the default.
The regulator reviews the price cap once every six months, and changes it based on the cost that suppliers have to pay for their energy, cost of policies and operating costs, among other things.
The new rate will come into force from October 1 for customers on their supplier’s default tariffs.
‘Higher energy bills are never welcome’
Ofgem chief executive Jonathan Brearley 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.
“The price cap means suppliers only pass on legitimate costs of supplying energy and cannot charge more than the level of the price cap, although they can charge less.
“If you’re struggling to pay your bill you can get in touch with your supplier to access the help that’s available and, if possible, shop around for a better deal.
“I appreciate this is extremely difficult news for many people. My commitment to customers is that Ofgem will continue to do everything we can to ensure they are protected this winter, especially those in vulnerable circumstances.”
How to save money on your energy bills
Switching energy providers can save you lots of money on your bills - and it is easy to do.
Comparison sites will show you the best deals around on the market. Many of the cheapest deals are usually found online and are fixed deals - meaning you will have to pay a set amount each month for the length of your contract.
Once you have decided on which deal to go with, all you have to do is contact your new provider.
They will want the following details: the name of your existing energy provider, how much you currently pay, a recent meter reading and your postcode.
Your new provider will do the rest and a switch should take no longer than three weeks.