Millions of households to see energy bills rise by at least £139

6 August 2021, 07:15 | Updated: 6 August 2021, 10:18

Millions of households will see their energy bills rise by £139.

It comes after Ofgem, the energy regulator, announced the biggest increase to its price cap yet.

The move was made due to a rise in wholesale energy prices, it said.

Jonathan Brearley, chief executive of Ofgem, said: "Higher energy bills are never welcome and the timing and size of this increase will be particularly difficult for many families still struggling with the impact of the pandemic.

"The price cap means suppliers only pass on legitimate costs of supplying energy and cannot charge more than the level of the price cap, although they can charge less.

"If you're struggling to pay your bill you can get in touch with your supplier to access the help that's available and if possible, shop around for a better deal.

"I appreciate this is extremely difficult news for many people, my commitment to customers is that Ofgem will continue to do everything we can to ensure they are protected this winter, especially those in vulnerable circumstances."

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But charities have warned the rise "could not be coming at a worse time".

The cap stood at £1,138 and had risen by £96 a year in April. The new changes take effect from October 1.

It is thought prices have also risen because of missed customer payments during the pandemic.

Peter Smith, director of policy and advocacy at fuel poverty charity National Energy Action (NEA), said: "Sadly we know this winter is going to be incredibly harsh for millions of low-income and vulnerable customers.

He added that the "increases could not be coming at a worse time".

"As well as a significant rise in general inflation - driving up spending on other essentials such as food - millions of people will see a reduction in their incomes, as furlough winds down and the uplifts to Universal Credit are likely to be withdrawn. Many people will also still be using more energy working from home.

"This toxic combination of high prices, reduced incomes and leaky, inefficient housing which uses far more energy than necessary, will lead to increases in utility debt and badly damage physical and mental health."

Ofgem reviews and changes the price cap once every six months, and the previous cap was based on the usage of an average household.

Energy providers have to charge below that cap and many set them just below.

James Plunkett of Citizens Advice said: "This price hike could lead to a perfect storm for families this autumn, hitting people at the same time as a Universal Credit cut and the end of furlough. It's particularly worrying given families on Universal Credit are far more likely to already be in energy debt.

"With bills rising and incomes falling, many families will find it hard to escape. For many, debt will be the inevitable consequence.

"It all adds to the growing case to rethink the government's planned cut to Universal Credit and keep this lifeline which has been vital to keeping so many afloat."