Level 2 of the Energy Price Cap comes into effect on 1 April 2019. From that date, energy suppliers will be able to hike the energy bills, of a household with average energy usage, to £1254.
That should sound like extremely bad news for energy consumers - basically because it is.
15 million households are going to get an energy price hike of over £1.5 billion pounds all at the same time (give or take a day or two).
But while the focus has been on the headline increase of £117, the reality is that, for certain customer groups, things are worse...much worse. We explain below.
Energy bills will be higher than before the Energy Price Cap came into effect
Table 1 shows the latest "Capped" prices for the Big 6 energy suppliers, together with comparable prices before and after the Energy Price Cap came into effect.
The data shows that.
1. Anyone hoping that the Big 6 would price below the level of the cap (Ofgem?) will be disappointed.
2. The average increase for the Big 6 is £119 – slightly higher than the price cap.
3. With the exception of ScottishPower customers, everyone else is worse off than before the Energy Price Cap came into effect. On average energy customers are paying £33 more than they were 4 months ago, with some seeing net increases £57 (4.7%).
Table 1 - Energy Price Cap changes - Big 6 suppliers
|Supplier||Pre EPC (£)||EPC v (£)||EPC v (£)||Latest increase (£)||Increase vs Pre EPC (£)|
If you have a standard electricity meter and pay quarterly by Cash or Cheque the increase will be closer to £123.
If you have an Economy 7 meter and pay by monthly direct debit the increase will be £135.
If you have an Economy 7 meter and pay by quarterly by Cash or Cheque the increase jumps to £143.
So, if your bills are going up by just £117, count yourself as lucky.
Table 2: Energy Price Cap (Default Tariff Cap) v2 - Increases Analysed
|Fuel||Direct Debit (£)||Change (£ / %)||Standard Credit (£)||Change (£ / %)|
|Gas||593||+51 (+9.4%)||636||+54 (+9.3%)|
|Electricity (standard meter)||661||+66 +(11.1%)||708||+69 (+10.8%)|
|Dual Fuel (standard meter)||1,254||+117 (+10.3%)||1,344||+123 (+10.1%)|
|Electricity (economy 7 meter)||815||+84 (+11.5%)||870||+89 (+11.4%)|
|Dual Fuel (economy 7 meter)||1,408||+135 (+10.6%)||1,506||+143 (+10.5%)|
Having seen Economy 7 customers' bills increase dis-proportionately under the Energy Price Cap, TheEnergyShop.com decided to do a bit of digging around. What we found was not pretty. Not pretty at all.
We fully appreciate that when setting rates, the Energy Price Cap needs to considered in the context of the overall bill. However, the overall bill is based on a very specific consumption profile and will mask the fact that customer usage profiles can vary considerably. Therefore, to gauge the impact of the Energy Price Cap on Economy 7 customers who use a significant proportion of their energy during off-peak hours, we have analysed the increase in Economy 7 off peak rates across of range of energy suppliers.
The data for a number of energy suppliers, is shown in Table 3. The analysis is by no means exhaustive nor intended to be. Rather it has focussed on showing how different energy suppliers have implemented rate changes under the rules of the cap. Those shown in the table have, in particular, made significant double digit increases in night time rates.
The data illustrates that;
• Average increases in Energy Price Cap headline bills can mask significant differences across different customer groups.
• That certain customers will have seen rates and energy bills increase by orders of magnitude more than the headline numbers (up to 61%).
• That vulnerable prepayment meter customers are not immune from significant doubledigit increases.
Joe Malinowski, founder of the award-winning energy price comparison website TheEnergyShop.com commented.
"15 million households are about to find out that the Energy Price Cap is anything but. While the headline increase of £117 should have, by now, frightened all but the most spendthrift to switch to a better energy deal, the reality is some customers will do far worse."
Joe Malinowski, continued
"Under the price cap certain energy suppliers have hiked night time unit rates by 20%, 30% and over 50%. We now have the perverse situation where supposedly cheap "off-peak" rates for some price cap protected tariffs are more expensive than standard rates of nonprotected tariffs. How did that happen?"
Joe Malinowski, concluded
"There is a clear message here for all customers on default tariffs. The energy price cap will not protect you from over-paying for energy. Indeed, it could cost you a lot more. A lot more than you expected."
Table 3 - Economy 7 unit rate increases analysed
|Supplier||Tariff||Pre EPC (p)||EPC v1 (p)||EPC v1 (p)|
|PFP Energy||Fair, Simple, Clear||10.25||13.05 +27%||14.93 +14%|
|EBICo||EBICo Standard||7.94||6.99 -12%||11.25 +61%|
|Together||Freedom Variable||11.49||15.40 34%||Not yet announced|
|Co-op||Green Pioneer Prepayment||9.58||9.58 0%||12.45 +30%|
|Robin Hood Energy||Evergreen (Cash / Cheque)||10.21||10.21 0%||12.36 +21%|