Energy regulator Ofgem has announced that it is to increase its energy price cap for the third time in a year, raising fears of a full-blown cost of living crisis.
The industry watchdog – which has been under heavy pressure from energy suppliers to raise the cap – says the increase is necessary after a record increase in wholesale gas prices around the world.
However, this will come as cold comfort for consumers facing an eye-watering increase in their energy bills. So how much will bills go up by – and when?
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How much will my energy bill go up by?
Energy industry watchdog Ofgem has announced that it will raise its energy price cap from £1,277 to £1,971 per year. The change will come into effect from the start of April.
Around 22 million energy customers will be affected by the change. The regulator previously raised its price cap in April and October last year.
Scores of small energy suppliers have gone bust over the last few months, after gas prices on the wholesale market – where suppliers buy their gas from – soared.
However, the energy price cap is not a cap on your total bill – as Ofgem ,, what you actually pay will depend on how much energy you use. Instead, the cap limits what suppliers can charge per unit of energy.
If you’re on a fixed-term energy tariff or a standard variable green energy tariff exempted from the cap by Ofgem, then the energy price cap will not apply to you.
The energy price cap applies to consumers who are on a default energy tariff, whether they pay by standard credit, direct debit or via a prepayment meter.
When will energy prices go up?
The latest increase in Ofgem’s energy price cap will come into effect from April 1st this year.
Ofgem reviews its energy price cap twice a year, in February and August. Any changes it makes in these reviews come into force from April 1st and October 1st respectively.
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