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Ofgem Energy Bills Warning Overview:
- Who: The Office of Gas and Electricity Markets (Ofgem)
- Why: Ofgem is warning consumers they may be getting higher annual energy bills if current conditions — which recently caused five small energy providers to go under — hold.
- Where: The high energy prices affect consumers across the United Kingdom.
Energy bills are trending upwards in the United Kingdom, and homeowners are bracing themselves for more price hikes and the possibility their energy provider could go under.
The Office of Gas and Electricity Markets (Ofgem) sets the maximum amount energy suppliers can charge customers on their standard variable tariffs, a number set to rise to an annual average of £1,277 on Oct. 1. Households with prepayment meters, however, may now see their annual energy bills hit a yearly average of £1,309, reports The Guardian.
Analysts are warning that the cap set by Ofgem could rise to between £1,440 and £1,500 a year if wholesale gas holds its current high price.
The market cap is set and re-determined by Ofgem every six months, but it could rise dramatically if the government regulator decides to suspend the cap in light of current conditions that have led to five small energy firms shutting their doors in the last five weeks.
Consumers Face High Energy Bills, Providers May Fold
Experts warn that, unless there is government intervention, more small energy companies will fall off the grid, leaving bigger corporations to take on their customers.
Ofgem has a protocol in place to automatically reassign a customer to a new energy provider if there’s goes under, in order to safeguard consumers from unexpectedly losing power. While this can help keep the lights on, it also can lead to significant bill increases, reports The Guardian.
Energy suppliers reassigned customers will have no obligation to honor the previous tariff they were charged for service, though Ofgem can still place a price cap on what the new provider can charge.
Customers who had fixed-rate deals from nine months ago could see their energy bills rise by as much as £250 each year if they choose to remain with the energy provider they are automatically reassigned to, reports The Guardian.
Credits that a consumer had with a failed energy provider will transfer over to their newly assigned supplier, and anyone that is unhappy can leave for a different supplier without paying an exit fee.
Last year, the government maintained the cap on energy bills into 2021 for about 15 million homes in the UK.
British Gas, the biggest energy provider in the country, paid consumers and Ofgem a total of £1.73 million last year after it mishandled payment changes affecting its prepaying customers.
Are you concerned your energy provider may not be able to withstand the current financial conditions? Let us know in the comments!
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