How to Tackle the Energy Price Increase

On 1st October 2021, Ofgem enforced its new energy price cap. This change is set to see people's energy bills increase by approximately £139 a year.

Here we will discuss the key information you may need to know about the 2021 Energy Price Increase so that you are informed on what this price change means for your financial circumstances.

What is an energy price cap?

The energy price cap is a limit on the maximum annual cost of gas and electricity bills. It applies to customers on default tariffs or customers using prepayment meters. The price cap is reviewed once every 6 months, once in summer and once in winter, and it has been decided that in this instance the price cap will be increased.

How much of an increase is being made?

According to Ofgem, the price cap before the increase (for people on default tariffs) = £1,138.

The new price cap (for people on default tariffs) = £1,277.

For people on default tariffs, the price cap increase is estimated to cost an extra £139 per year.

The price cap before the increase (for people on a prepayment tariff) = £1,156.

The new price cap (for people on a prepayment tariff) = £1,309.

For people on prepayment tariffs, the price cap increase is estimated to cost an extra £153 per year.

This is the highest price cap increase since the price cap launched in February 2019.

Who will be affected by the Energy Price Cap Increase?

You will be affected by the price cap increase if:

  • You are on a prepayment energy meter.
  • You are on a default tariff.

You will not be affected if:

  • You are on a fixed-term energy contract.
  • You are on a standard variable green energy tariff.

If you're not sure of your energy deal, don't worry! The information is often on your bill or you can contact your provider for assistance.

For more information on how the changes may affect you please visit Ofgem or, for more personalised advice, reach out to your energy provider.

Why is the energy price cap increasing?

The cost of gas for suppliers has risen 50% since August 2021, forcing electricity and heating prices to increase for the public.

Should you switch energy providers?

Currently, it is recommended not to switch energy providers. This is because energy prices are increasing across the entire UK market, so it's hard to offer anyone a good deal at the moment. There is no harm in searching to see if you can find a better deal, but this may be difficult given the current circumstances.

You are not alone

We know this is tough news, but there are measures in place that can help you.

The first thing you should do if you can't pay your bills is to contact your energy provider. They may be able to help you and ease the pressure on your finances.

If you are looking for additional financial support, our friendly team of experts may be able to help you to reduce your debt repayments into one monthly repayment that is affordable to your circumstances. This may leave you in a more financially stable position which could make the price cap increase less financially stressful for you.