Consumers are set to see their energy bills rocket after watchdog Ofgem said it was to increase a price cap on standard tariffs just six weeks after the measure was introduced.
The cap will be raised to £1,254 a year for someone with typical usage from 1 April – £34 more than companies were charging in December when the cap was brought in and adding £117 to the average bill.
Consumer groups hit out at the rise, which they said “conned consumers”, who had believed the regulation would keep their energy bills steady. They said householders should switch to try to find the best deal.
Ofgem said that rising wholesale prices had prompted the move and insisted that suppliers would not profit.
Richard Neudegg, head of regulation at uSwitch.com, said: “People could be forgiven for feeling that they’ve been completely and utterly conned by the government’s energy price cap. Ofgem proudly proclaimed that the cap would cut bills by an average of £76 a year when it came into force at the beginning of January – but just weeks later, it’s announcing a jaw-dropping increase. It’s now crystal clear that households were never going to save what was promised.”
Emma Grant McColm, energy policy manager at Citizens Advice Scotland, said that consumers should try to switch supplier – adding that they could also save money on bills with energy efficiency measures or better boiler controls.
She said: “Today’s announcement is concerning; although the price cap was always due to fluctuate with wholesale prices, this represents a very large increase. The price cap was designed to protect consumers from the most expensive of tariffs, however it doesn’t protect them from overall energy price rises.
“This news highlights the underlying problem that energy is becoming increasingly unaffordable as wholesale prices rise, pushing more Scots into fuel poverty.”
The cap was introduced in December, with bills capped at £1,136 a year – saving 11 million households £75. ScottishPower direct debit customers on default deals were billed as being set to save the most at £121 per year.
Energy and clean growth minister Claire Perry said: “As Ofgem has said, these increases reflect the sharp rise in gas and electricity costs. The cap is designed to ensure energy companies offer good value to customers and continue to thrive as an efficient business.
“We were clear when we introduced the cap that prices can go up but also down. The key thing is that as a result of the cap, 11 million households on standard variable tariffs will be £75 to £100 better off and energy suppliers will no longer be able to rip off customers on poor value tariffs.”