British Gas and Scottish Power to hike bills after Ofgem price cap rise
Millions of British Gas and Scottish Power customers will see their gas and electricity prices rise by more than 10% on average from Monday 1 April – if you're affected, ACT NOW to beat the rise.
The energy giant will hit customers with an average £119 rise from Monday 1 April, in response to regulator Ofgem increasing the level of its price cap on standard and default energy tariffs.
The rise will mean an increase to £1,254/year for a dual-fuel household with typical use. Yet this ISN'T the maximum anyone will pay, as the price cap places a maximum charge on the rate you pay for gas and electricity – use more and you'll pay more, use less and your costs will be lower.
Update: Hours after the British Gas announcement, Scottish Power became the fifth of the big six to increase prices to the level of the cap, affecting about 930,000 customers on a standard tariff. From April, households on an SVT will pay on average £117/yr more, on typical use.
Why are prices rising?
The energy price cap limits the amount suppliers can charge for each unit of gas and electricity, and sets a maximum daily standing charge (what you pay to have your home connected to the grid).
It's reviewed twice a year, in April and October, and earlier this month Ofgem announced it would be raising the price cap from £1,137/yr to £1,254/yr for households with typical use (that's NOT the maximum householders can be charged).
It's blamed the increase on higher wholesale energy costs caused by rising oil prices, as well as factors such as green energy schemes and higher demand during the 'Beast from the East' weather event last year.
MoneySavingExpert.com founder Martin Lewis predicted that "most of the big six providers [would] snuggle their prices right against the cap".
I'm with British Gas – how will my bills change?
Here's how your British Gas bills will change:
- If you're on the SVT, your annual bill will rise on 1 April. The average increase will be £119/yr to £1,254/yr, up 10.5%, on typical use.
- If on a fixed deal, your bill won't change until your fix is up. However, if it ends after 1 April you'll be moved on to a new, more expensive temporary tariff.
- If you're on a temporary tariff, your bill may change, depending on when you were moved to one of these default tariffs:
Before 1 September 2018 – your bill won't change until your fix is up. You'll then be moved to its new, more expensive temporary tariff, up to an average £1,254/yr.
Between 1 September and 31 December 2018 – your bill will return to the price you were paying prior to 1 January 2019.
Since 1 January 2019 – your price will increase at the same rate as the SVT, with the average price set to increase to £1,254/yr.
What can I do?
With the majority of the big six already confirming they're upping standard tariff rates, and the remaining two likely to follow, the best way to save on your energy is to switch provider.
If you're on a standard or default tariff, you're free to switch away at any time. Suppliers can't charge you exit fees if you're on this type of tariff – and savings of well over £250/yr are possible.
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