British Gas and EDF Energy both hike energy bills by maximum allowed

1. Hopes that suppliers may price energy bills below the energy price cap dashed
2. British Gas hikes standard tariff by £97 (9%)
3. EDF Energy hikes standard tariff by £96 (9%)
4. 4.5 million households will see their bills hiked by £400 million

Any hopes that energy suppliers might hike their standard tariffs to below the energy price cap were dashed now that both British Gas and EDF Energy have both increased rates to the maximum amount permissible.

With effect from 1 April 2021, customers of both British Gas and EDF Energy who are on either Standard tariffs or other default tariffs will see their bills increase by over 9%. For customers paying by monthly direct debit this means an increase of £96-£97. For those paying by card or cheque the increase is £101-£102.

The Energy Shop Comment

Joe Malinowski, founder of energy price comparison website The Energy Shop commented….

"We all knew this was coming but that doesn’t make it any easier to swallow. Households are not only facing increased rates for their energy, but also higher usage due to lockdown. If the headlines look ugly, then the reality is uglier still."

Joe Malinowski, concluded.

"There is no point keeping your fingers crossed and hoping it won't happen. Energy bills are going up and if your energy supplier hasn't hiked bills yet, then it is only a matter of time. The good news is that there are plenty of fixed energy tariffs that can protect you from these price hike and save you up to £193 as well."

About the energy Price Cap – some facts, figures and analysis

This is the 6th time the cap has been set since it was introduced on 1st January 2019.

So far, we have had 4 cuts and 2 massive increases (see Table 1 below). On balance this leaves Standard Variable Tariffs £41 (3.5%) lower than they were before the cap came into effect. To put this into context, over that time wholesale gas prices have fallen by 13%.

A quick reminder… The energy price cap was introduced to bring "an end to rip-off energy prices once and for all".

It was supposed to achieve this by reducing the difference between poor value Standard Variable Tariffs and the cheapest energy deals in the competitive market so that those customers who couldn't or wouldn't switch, would end up overpaying by less. Still overpaying, but just by less.

So, has the energy price cap delivered?

Analysis from energy price comparison site TheEnergyShop.com shows that:

1. In the 12 months before the price cap came into effect, the price differential between a basket of the cheapest deals and the basket of the Standard tariffs of the Big 6 was £288. That is what the household with average energy usage would have saved themselves, each year, if they had switched their energy.
2. The price cap has now been in operation for 25 months.
3. In those 25 months the cap has reduced the price differential in only 7 monthly periods (28% of the time).
4. 72% of the time the price differential has been greater than it was without the price cap; that is the price cap has been making the situation worse not better.
5. Any customer who has stuck with the price cap has, to date, already lost out on savings of £691 and counting.
6. The evidence shows that Ofgem’s policy intervention in this area has genuinely made things worse for consumers.

Contacts

Scott Byrom
Chief Executive Officer
07772 129 591
scott.byrom@theenergyshop.com

Joe Malinowski
Founder
07970 160 541
joe.malinowski@theenergyshop.com