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Energy price cap hike will hit most vulnerable

The energy price cap increase will set older people up for a ‘miserable and anxious winter’, Age UK has warned.

Ofgem, the energy regulator for Great Britain, said the cap will increase from October 1. Those on default tariffs paying by direct debit will see an increase of £139 from £1,138 to £1277. Prepayment customers will see an increase of £153 from £1,156 to £1309. 

Ofgem said this increase is driven by a rise of over 50% in energy costs over the last six months with gas prices hitting a record high as the world emerges from lockdown.

Surging global fossil fuel prices are already driving up inflation for consumers, making fixed-rate energy tariffs not covered by the price cap, as well as petrol and diesel more expensive.

Caroline Abrahams, charity director at Age UK, said energy suppliers must identify and support those that will struggle in the cold months to come.

‘The level at which energy prices are capped is of enormous importance to older people because we know they are less likely to switch providers for a better deal, especially if they are not online, which is the case for about half of the 75+ population.

‘For all those who are therefore effectively stuck on their existing tariffs, the best protection they have against unfair and unaffordable fuel bills is a robust energy price cap. Unfortunately, the fact that the cap is going up significantly this year will set them up for a miserable and anxious winter.

‘Sadly, this announcement is likely to mean even more older people find themselves in this horrible position and energy suppliers must identify and support those that will struggle in the cold months to come.’

Ofgem said any customer in vulnerable circumstances or worried about paying their energy bill should contact their supplier to access the support available.

Customers may be eligible for extra help such as affordable debt repayment plans or payment breaks, emergency credit for prepayment meters and a £140 bill rebate under the Warm Home Discount.

Last week suppliers also signed up to an industry commitment to reach out to those who most need help this winter.

Customers can also shop around to save money before the increase takes effect on October 1. Those who don’t want to switch supplier or are unable to can ask their supplier to put them on a better deal.

Jonathan Brearley, chief executive of Ofgem, 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.

‘We have put tough rules in place to ensure suppliers treat customers who are struggling with bills fairly, and welcome their commitment to reach out to those who most need help this winter. Where help is not forthcoming, we will not hesitate to act.

‘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.’

Ofgem adjusts the price cap twice a year based on the latest estimated costs of supplying energy.

The biggest and most unpredictable factor is the wholesale cost of electricity and gas paid by suppliers and influenced by global markets. This accounts for roughly 40% of the overall price cap level.

Gas prices have risen to a record high in Europe due to a recovery in global demand and tighter supplies. This is increasing the cost of heating homes and pushing up electricity prices.

Last winter, the level of the cap fell by £84 after passing onto customers the savings from lower wholesale energy costs as countries went into lockdown and demand fell.

Photo Credit – Pixabay

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