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Prepay and vulnerable energy customers to see gas and electricity bills increase

But affected energy bills are still £42 cheaper than Big Six average

Prepay and vulnerable energy customers to see gas and electricity bills increase

Customers whose gas and electricity prices are capped will see £58 added to their bill over the next year on average, after energy regulator Ofgem announced it plans to increase the level of the cap.

More than five million customers whose bills are limited by the regulator’s safeguard tariff will be affected. The average dual-fuel bill will increase from £1,031 to £1,089 per year.

This will affect you if you have a prepayment meter for energy, or are among the one million vulnerable households to whom the cap also applies. The higher cap will apply from 1 April 2018.

Although your bills could rise, they will still be £42 cheaper per year than the average Big Six standard variable tariff, Which? research reveals. Collectively, affected households will save £210m.

Even if your bills are limited by the cap, you could still save even more money on energy – compare gas and electricity prices with Which? Switch to find out how much.

How much does the energy cap save you?

The safeguard tariff is the maximum amount that energy companies can charge customers who prepay for energy. Last week, Ofgem extended the cap to almost one million additional vulnerable customers.

But energy companies can, and do, still charge less than the cap.

The cap ensures bills are at least £42 cheaper per year than the average price paid by direct debit medium energy users on one of the Big Six energy firms’ standard variable tariffs. Around two thirds of customers are on these tariffs.

But the cap is £77 less than the priciest Big Six standard tariff (Npower’s), and still £12 cheaper than the cheapest Big Six standard tariff (from British Gas).

Plus, you’re protected from overpaying £289 per year, compared with the cost of the priciest tariff currently on the market for a medium energy user. This is small supplier Glide’s Electricity and Gas tariff.

Why is the cap increasing?

Energy regulator Ofgem said higher gas and electricity costs were the reason for the increase. It said that the bills of people protected by the safeguard tariff used to be among the highest in the market.

Which? managing director of home products and services, Alex Neill, said: ‘While it’s right that help is extended to vulnerable customers, an average saving of just £66 on people’s energy bills from April makes the safeguard tariff far from the cheapest deal on the market.

‘Anyone overpaying on a poor-value tariff should look to switch away to a better deal immediately, as they may save up to £305 a year.’

Ofgem can change the level of the safeguard tariff every six months. It uses the estimated cost of supplying energy and changes in government policy costs to do this.

Our energy pricing research

Data is from Energylinx, based on a medium user (using Ofgem averages of 3,100kWh electricity and 12,000kWh gas per year), paying by monthly direct debit with paperless bills. Data correct on 7 Feb 2018.

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