EDF Energy announced that they will be increasing the price of their standard variable energy tariff by 10% in April, after Ofgem raised the price cap.
Ofgem announced last week that the energy price cap, which was only introduced on January 1 to stop energy companies ‘ripping off’ consumers, will rise to £1,254 a year for the average household on April 1. That is an increase of £117 a year, or 10.3%. The cap is only applied to customers on dual fuel tariffs and is placed on the unit price of energy – it is not a limit on how much any household can pay in a year, which still depends on their consumption.
EDF is the second of the Big Six energy suppliers to announce a price hike in the last week after E.On said they were doing the same just the day before. Other major UK suppliers are expected to follow suit in the coming days.
Ofgem explained that they were forced to raise the price cap due to increasing wholesale energy costs, which they claim are around 17% higher than when the level of the original cap was announced in November last year. Other costs have also increased recently to help raise the level of the cap, including higher costs in the transportation of gas and electricity and higher commitments to green energy schemes and policies.
“Ofgem’s announcement confirmed that costs increased significantly last year and this was further evidenced by the collapse of several small suppliers,” said a spokesperson for EDF Energy. “As a responsible and long-term business, it is important that we reflect the costs we’re facing. These changes for standard variable tariffs will not come into effect until 1 April and we will write to customer before then, highlighting the other tariffs available that they can switch to.”
Around 1.3 million customers who are currently on EDF’s standard variable tariff will be affected. That’s out of a total of 11 million consumers across the UK who are on their supplier’s default tariff and could be hit by the potential price rises in April.
The latest price rise from one of the country’s major energy suppliers will come as a further blow to the government. The price cap was originally introduced to protect vulnerable consumers from getting ripped off by energy companies, but the latest hikes are as big as any seen in the last two years.
Although customers on standard variable tariffs will see their energy bills go up in April, the one advantage to being on a default tariff is that they are free to switch suppliers without having to pay any exit fees for terminating their contract. Customers have been told they could save up to £300 a year by comparing energy tariffs and switching suppliers.