‘Painful’ £2,000 energy bills price cap coming for consumers

[dutchman]

Rising gas prices and the costs linked to suppliers' collapses are expected to pile pressure on households



Millions of households face a “painful” rise of up to £700 in their energy bills when the price cap is updated next spring, analysts have warned.

With gas prices expected to remain high after surging this winter, Investec estimates the average capped bill could rise from £1,277 per year to £2,000 when the limit is reviewed in April.

That represents an increase of 56pc or £723 – roughly £60 per month extra.

“Although well trailed, this will still come as a shock to many,” energy analyst Martin Young wrote.

Rising gas prices and the costs linked to the failure of 25 suppliers this year, which are spread across all consumers, account for the bulk of the increase.

Mr Young said £300 of the new total was made up of taxes or government levies, giving ministers some leeway to cushion the blow.

For example, they could set VAT on energy bills to zero – as has been called for by many MPs – or shift the cost of green energy levies to general taxation.

But he warned: “It will still be painful. Whichever way you look at it, this is not going to be pretty.”

It comes after experts at energy consultancy Cornwall Insight last week predicted the price cap could rise to £1,800 per year, an increase of £523.

Whatever the change, the rise will pile further pressure on household finances at a time when families are already being hit by national insurance rises and surging inflation.

Some 15m homes in Britain are protected by the energy price cap, which limits how much suppliers can charge people who are not on fixed deals.

Ofgem, the industry regulator, currently reviews the limit every six months but is currently consulting on whether this could be shortened to three months or even less in emergencies.

However, the role of the cap has come under the spotlight in recent months after the collapse of a string of energy suppliers, including Bulb, the seventh biggest.

Some of the collapsed firms argued that the cap blocked them from raising prices to compensate for rocketing wholesale gas costs –forcing them to sell energy at a loss.

But the Government has dismissed this, saying firms should have bought energy far enough in advance to protect themselves from price swings.

Consumer watchdog Citizens Advice accused Ofgem of a “catalogue of errors” earlier this month, in a report that claimed the regulator had failed to take action against “unfit” suppliers in poor financial health.

[rebbonk]

And let's not forget the latest public information films encouraging you to open windows and doors to let covid out!