EDF Energy to hike bills by an average £693/year after energy price cap rise
About two million EDF Energy customers on standard tariffs will see gas and electricity bills jump by a typical £693 a year from April, after it announced it's raising prices by the maximum allowed under the new price cap.
EDF will hike its standard variable tariff (SVT) prices to an average £1,971/year based on typical use from 1 April 2022. It's the first of the big energy firms to confirm it's raising prices, after Ofgem announced it would increase the level of the price cap on standard and default tariffs from April – with more expected to follow as the biggest suppliers typically price their standard tariffs on or within £1 of the cap. Scottish Power has said it will charge "in line with the cap", and we're checking if this means it will set prices right at the cap.
EDF is raising prices to the maximum allowed
Under the price cap, suppliers are limited in what they can charge for their standard variable tariff. However, regulator Ofgem announced on Thursday 3 February it would increase the price cap to its highest level, following rocketing wholesale prices this year. On typical use, the energy price cap is set to rise from £1,277/year to £1,971/year for a typical dual-fuel household paying by direct debit.
Remember though, this ISN'T the maximum everyone will pay. The cap sets 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.
If you're with EDF, here's how your bills will change:
- If you have a credit meter and are on its SVT, the price will rise on 1 April 2022. EDF's SVT prices are currently at the maximum allowed under the cap, at £1,277/year on typical use, and it will increase it to the max allowed under the new cap – £1,971/year.
- If you're a prepay customer, the price will also rise on 1 April 2022. We're waiting on confirmation from EDF, but it's likely its standard prepay tariff will also rise from the current maximum allowed under the price cap to the new limit, from £1,309/year now to £2,017/year from April.
- If on a fixed deal, the price WON'T change until your fix is up. However, if your fix ends after 1 April 2022 and you don't switch, you'll be moved on to EDF's SVT, which will have become even more expensive as a result of the price rise.
There are still no open market tariffs that are cheaper than the new price cap – so for most, it's likely still best to do nothing
The market's cheapest deal that you can switch to right now is £2,209/year – that's considerably higher than the new price cap. At that rate, fixing now is still unlikely to be worth it. Watch Martin's video explainer from the latest episode of The Martin Lewis Money Show Live.
If we assume the price cap stays the same after the 1 April 2022 hike, you'd have to find a cheap fix that's no more than 44% costlier than your current price-capped tariff.
Yet we know that the cap will change again in October, and if wholesale energy prices stay where they are now, there would likely be another rise of about 20%, to more than £2,300/year on typical use. Based on this, you'd need to find a fixed deal now that's no more than 59% more expensive than your current price-capped tariff to make it worth considering.
Bear in mind we don't have a crystal ball here, and we've had to make a number of assumptions when calculating this, but these percentages should work as a rule of thumb.
Right now, the market's cheapest fix is on average 73% more than the current price cap and 12% more than the new cap, but we've seen some suppliers offer slightly more competitive deals to existing customers.
If you do want to compare your energy tariff, be aware that for those on standard tariffs, when you compare in our Cheap Energy Club (and on other sites), we need to use the current cap as a base for comparison as we don't yet have the full rates (which vary per region) from EDF under the new cap from April. That means we can't factor the upcoming hikes into comparisons, so you need to add 54% to your current costs, and compare that to the estimated annual cost of other tariffs (ignore the 'savings' figures).
Struggling to pay your bill? There's additional help available
The massive upcoming hike to the price cap will pile the pressure on many households already struggling with rising costs. While the Government support announced last week may help some, it likely won't cover the full cost of the hikes and it's likely energy bills will remain high for some time.
If you're having issues paying for your gas and electricity, our new Struggling with energy bills? guide details all the help available, including when to speak to your provider, what grants and help schemes you may be able to access, how to get free energy and debt advice, freebies and grants to improve your home's energy efficiency, ways to cut usage and more.
How does the price cap work?
The price cap sets a limit on the maximum amount suppliers can charge customers on standard tariffs for each unit of gas and electricity you use, and sets a maximum daily standing charge (what you pay to have your home connected to the grid).
As the cap limits the price providers can charge for each unit of gas and electricity, if you use more energy you'll pay more, use less and you'll pay less.
The price cap is currently reviewed twice a year, with changes coming into effect in April and October. However, we're expecting Ofgem to announce major changes later this week – see our Price cap explained guide for news when we get it.
What does EDF say?
Philippe Commaret, managing director of customers at EDF, said: "We know that these changes, driven by global gas prices, will not be welcome news for customers, but we want to be fully transparent and give our customers as much notice as possible. We've never stopped offering our customers help and will continue to do so, although the scale of the global problem means we are constrained in how much we can do.
"It is good to see the Government acting now to take some of the sting from the forthcoming rise in April, although we know many customers will continue to struggle. We will work with the Government to implement the schemes in the best way possible for customers.
"The market also needs longer-term reform to ensure we don't end up here again, and Britain needs more of its own nuclear and renewable power generation and greater energy efficiency to reduce reliance on gas from other countries."