Millions to face energy bill hike as big six play price cap to the max

- Some of the most vulnerable on prepayment tariffs likely to see prices rise by £57/yr on 1 April

- Martin Lewis calls cap “flaccid” as firms set prices just pounds away from new limit

Millions of households face paying an average £57/yr more from Sunday 1 April according to new analysis from the UK’s biggest consumer website MoneySavingExpert.com. The energy price cap(1) for prepayment and vulnerable customers will rise by 5.6% to £1,089/yr on typical usage.

Five of the big six(2) energy giants have confirmed they will be increasing their prices to just £1 or £2 shy of the new cap.SSE has yet to confirm any changes. This means many of the four million prepayment customers and a further one million vulnerable customers on standard credit meters are facing a price hike from the start of next month.

What are suppliers doing?

Average annual cost – dual fuel(i)

SUPPLIER

CURRENT COST

COST FROM 1 APRIL

Ofgem price cap

£1,031

£1,089

British Gas

£1,029

£1,087

E.on

£1,030

£1,088

EDF

£1,031

£1,088

Npower

£1,030

£1,088

Scottish Power

£1,030

£1,088

SSE

£1,028

TBC

Cheap prepay deal (Bristol Energy)(ii)

£988

£988

(i) Based on typical usage figures from Ofgem.

(ii) Cheapest prepay deal available across all regions (excluding providers being investigated by Ofgem).

Martin Lewis, founder of MoneySavingExpert.com says: “Politicians had promised energy price caps were to be the saviour of energy market rip offs. Yet in practice, what we’ve seen so far is flaccid.A price cap is supposed to set a maximum price for the ‘few’ firms not engaging in competition.That was never going to happen. In reality, it’s simply allowed all the big firms to say, ‘that’ll do’, and set their prices within a quid or so of the maximum.

“Three of the big six providers are less than £15 cheaper than they were before the price cap came in, when we were told it would end the rip off. But there’s not been a major round of price rises since then soI doubt the millions of people who’ve been told they’ll benefit from this will be jumping for joy at this miserly 1.5% reduction.

“So forget the price cap.The best advice for most people on prepayment meters is to do a comparison to see if there’s a cheaper tariff.For someone on typical bills, savings of £100 a year are possible.But as many of the poorest in society are on prepay, the sad news is that this is still an uncompetitive market, and far cheaper deals are available via switching to a normal billed meter.The big six do allow people to do that for free, provided they pass a credit check so it’s worth trying, and then moving to a firm with much more competitive rates.”

Check if you can switch to a better deal using MSE’s free Cheap Energy Club or see MSE’s Prepaid Gas and Electricity guide for more on how to switch.

-ends-

Notes to editors

(1) The price cap sets a maximum amount that suppliers can charge for each region and meter type.

In February, regulator Ofgem announced it was increasing the prepayment price cap – introduced in April 2017 – from the current average of £1,031/year to £1,089/year based on typical use, a rise of 5.6%. This could affect about four million prepayment customers and a further one million vulnerable customers on standard credit meters, costing them an average £57/yr more from Sunday 1 April 2018.

The cap is reviewed twice a year – with any changes taking effect in April and October – to reflect the estimated underlying cost of supplying energy.

(2) For most of these providers, their standard tariff is the only prepayment option they offer - so if you're with one of these, you're likely overpaying.

About Martin Lewis: Martin Lewis OBE, Money Saving Expert, is the journalist and consumer campaigner who created MoneySavingExpert.com and is now the site’s Executive Chair. Martin also founded and chairs the Money and Mental Health Policy Institute charity.

He’s the UK’s most-googled man, Citizens Advice’s Consumer Champion of the Year, and has spearheaded major financial justice campaigns including bank charges reclaiming (over seven million template letters downloaded), PPI reclaiming (over six million) and a successful large-scale campaign to get financial education in schools. He has his own prime-time ITV programme, The Martin Lewis Money Show, as well as a range of other regular media slots. He was appointed OBE in the Queen’s Birthday Honours in June 2014.

About MoneySavingExpert.com: MoneySavingExpert.com is dedicated to cutting consumers’ bills and fighting their corner. The free-to-use consumer finance help resource aims to show people how to save money on anything and everything, and campaigns for financial justice. It was set up in 2003 for just £100, and its free-to-use, ethical stance quickly made it the UK’s biggest independent money website, according to internet ranking site Alexa.com, and the number one ‘Business and Finance – Business Information’ site, according to Hitwise. It has more than 12 million people opted-in to receive the weekly MSE’s Money Tips email, and more than 16 million unique monthly site users who visit more than 28 million times a month. In September 2012, it joined the MoneySupermarket.com Group PLC.