While most households saw a slight reduction in energy bills from 1 July, new data reveals that for hundreds of thousands of households, bills will be much higher than the Ofgem Price Cap.
Charts obtained by the Warm This Winter campaign from analysts at Future Energy Associates (FEA), show that households on 274 different tariffs fixed the price of their energy bills at a level above the new Ofgem Price Cap. [1]
The Ofgem Price Cap sets the average household’s energy bills at £2,074, but households on these specific tariffs will only be protected by the Government’s Energy Price Guarantee (EPG) which rose from £2,500 to £3,000 for the average household from 1 July.
Customers on these tariffs will see bills soar by an average of £500 a year. Without the EPG protection, customers on some deals could be paying almost 2.5 times the Ofgem price cap level. [2]
FEA estimate that around 1.5 million energy customers will be affected.
Households affected are customers of a range of firms such as Scottish Power, EDF, Octopus, London Power, M&S Energy, Co-operative Energy, British Gas, Utility Warehouse, Ebico Living, SSE and So Energy. [3]
While households on 52 of the tariffs affected can leave with no penalty, others may be charged to exit their deal early. These exit fees can range from £50 to £400.
A spokesperson for the End Fuel Poverty Coalition, commented:
“This news will send shockwaves through hundreds of thousands of households who thought they were doing the right thing by fixing their energy tariffs.
“It turns out they’ve been taken for a ride by energy firms who may now be charging them more for their energy than people on the Ofgem-fixed standard variable tariff.
“Energy firms must work immediately to end this discrepancy and bring all tariffs into line with the Ofgem price cap or waive exit fees for these customers. If energy firms won’t act, the Government must reduce the Energy Price Guarantee to be in line with the Ofgem Price Cap.”
Tessa Khan, Director of Uplift which is part of the Warm This Winter campaign, commented:
“The murky world of fixed tariffs is just another failing part of Britain’s broken energy system, and shows just how difficult it is going to be for consumers looking to lower their energy bills.
“In the near term, we need Ofgem to investigate how companies have been able to lock customers into extortionate deals. But with prices set to stay high across the board for years to come, only the government can solve our dysfunctional energy system by investing in insulation and cheaper renewables.”
The Ofgem Price Cap affects around 29 million customers on standard variable tariffs (SVTs), including around 4 million customers on prepayment meters (PPMs). Despite a slight reduction in bills from 1 July 2023, these customers will have energy bills that are double what they were in 2020 and 60% above what they were before the invasion of Ukraine. This means that customers will continue to pay similar amounts for their energy as last winter, but with people having less ability to pay as the cost of living crisis continues.
However, Ofgem figures show that around 3 million households are on fixed tariffs and not covered by the Ofgem Price Cap. Future Energy Associates estimate that around 1.5 million of these customers are fixed onto one of the 274 tariffs affected, around 700,000 of these households will be able to exit for no penalty.
On 64 of these tariffs, households were paying less than the £2,500 EPG rate, so will not necessarily see their bills increase, but will still be paying more than the Ofgem Price Cap from 1 July.
Households on 210 of the tariffs will see an increase in bills as they were protected from paying more than the Energy Price Guarantee of £2,500 for an average household in recent months, but that protection changes on 1 July to limit bills to an average of £3,000.
ENDS
[1] The full list of tariffs affected can be made available on request.
[2] For example, “Help Beat Cancer Green Flexi SR October 2023 DM1 Online”. Scottish Power, Exit Fee, £300.0, Annual Cost for DDM £5,426.50. Or 2.5 times the Ofgem Price Cap. Tariff information – ScottishPower.
[3] Utility Week reports that Ovo is maintaining a £2,500 cap for customers. GEUK and Ecotricity have been excluded from the list as their tariffs that are affected have additional rules and regulations in place. However, some tariffs that are not included in the analysis could also be affected as regional price variations could tip their average household costs over the Ofgem Price Cap. Energy firms wishing to update this news story with information on their policies can email info@endfuelpoverty.org.uk.