Millions of British Gas customers should expect a rise on their gas bills by an average of £119, with the firm joining 3 more “big 6” members in increasing their prices.
Up to this point, EDF, E.on and Npower have all announced changes to their Standard Variable Tariffs (SVT), which customers are usually put onto by default once their fixed price deal expires, in response to the price cap change. The rest are sure to follow.
The firm has announced it’s raising its prices by 10.5 per cent- the maximum allowed by the UK’s regulated price cap- which will see the typical dual-fuel bill rise by £119.12 a year, and costing the average SVT customer £1,254 per year. Customers who use a vastly different amount of gas or electricity are less prone to surprises here.
The increase will be the biggest of its kind since the the late 1990s, when the energy markets were first opened up to competition, according to the Evening Standard.
This is due to take place on the 1st of April, and will hit nearly 4million UK customers. Due to the sheer size and popularity of the energy firm, it will see the biggest figures affected of all of the chances thus far.
Regulator Ofgem reviews the cap – introduced after Theresa May pledged to protect energy customers in 2017 – twice a year, with the next price discussion expected in August. We’ll break this down below.
How do they do this?
The energy price cap is a government implemented rule, designed to limit the amount suppliers can charge customers for their energy. This works by setting a maximum daily standing charge (what you pay to have your home connected to the grid) and not changing it often to protect those in the working class.
It’s reviewed twice a year- with discussions usually taking place in the months leading up to April and October, when the results and changes are announced.
Earlier in the month, Ofgem announced it would be increasing this price cap from £1,137 to £1,254 per year for households with average usage- those who use more will still be charged more.
Ofgem calculates the cap using a formula that includes wholesale gas prices, energy suppliers network costs and costs of government policies, such as renewable power subsidies, blaming rising oil prices primarily, as well as things such as green energy schemes and higher demand during extreme weather.
Is there a way I can avoid this?
Sadly not. However, the majority of the big six have already confirmed they’re increasing standard tariff prices, and the remaining two won’t be far behind. The best way to save on your energy now is to switch provider- and if you’re a company then we can help.
If you’re signed up to a standard or default tariff, you can switch to a different provider at any time. Suppliers can’t legally charge you exit fees if you’re on this type of tariff, meaning you’re free to save!
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