Millions facing higher bills as energy price cap rises

Millions of people are facing the prospect of higher monthly bills after the energy price cap rose by more than £100.

From Friday, the cap on what energy companies can charge households for their monthly consumption will rise by £139 for people on default tariffs and £153 for people on pre-payment meters.

The 12 per cent rise, agreed in August, is likely to affect around 15 million households and will see the annual charge for those on default tariffs paying by direct debit and using an average amount of energy jump from £1,138 to £1,277.

Households with average energy use and on prepayment meters will see their yearly bills climb from £1,156 to £1,309.

Those using larger-than-average amounts of energy will be hit with bigger bills.

The price cap is up for review again in April 2022.

The ongoing energy crisis, which has seen several suppliers go bust, has led to calls for the cap to be scrapped so that firms can pass on higher gas prices to customers.

Ministers have hinted that the government may consider scrapping the cap.

Asked if the cap would be removed “if gas prices carry on rising”, cabinet minister Alok Sharma said last month: “Let’s see where we are. I know that the business secretary is going to have these very detailed discussions.”

Surging natural gas prices have pushed seven energy suppliers out of business this year – and it is feared that more may go bust very soon.

Prices surged by more than 70 per cent in August alone, and households could already see bills jump by as much as £400 in a year, according to some estimates.

Research from the Resolution Foundation has warned that the energy price hike combined with the planned £20 cut to universal credit payments will cause a “cost of living crunch” for lower income families.