The timing could not have been worse. As snow blanketed parts of Britain and people turned up their heating, the energy regulator was preparing to authorise one of the biggest price rises in a decade. On Thursday this week, about 15 million households, more than half the country, will be told that their gas and electricity bills will go up in April by what analysts estimate will be as much as 10 per cent or £100 a year, as Ofgem increases the cap on suppliers’ prices. Wholesale costs, which make up about 40 per cent of the bill, rose last year as higher global oil prices pushed up gas prices and in turn the price of electricity generated by burning gas. Although prices have eased in recent months, Ofgem assumes that suppliers buy in advance, so higher prices are now locked in. There are increases, too, in policy costs, such as renewable energy subsidies levied on bills. Deepa Venkateswaran, of Bernstein Research, estimate s a total increase of about £100 or more for both the default and pre-payment cap, taking most standard tariffs back up above where they were before the cap came in. A rare external voice defending the cap is Citizens Advice, the consumer charity. “If the cap was not in place, suppliers would still likely be increasing their prices, but would be doing so from a higher starting point,” Gillian Guy, its chief executive, said. “The cap means that people are paying a fairer price now, and will continue to pay a fairer price even if the level of the cap rises.” Few proponents are under any illusions that it will be an easy message to sell. Big suppliers are seizing on the opportunity of Thursday’s price increase to attack the policy, even though most admit privately that they would have charged higher prices without it. Unions too, never hitherto defenders of “fat cat” energy bosses, are rallying against the policy as companies slash jobs to improve efficiency. Npower last week blamed 900 cuts on the cap.
Times 4th Feb 2019 read more »
Telegraph 3rd Feb 2019 read more »