From April 2nd Ofgem’s energy price cap will rise over 50 percent with a typical user seeing their annual bill now capped at £1,971. For customers with Octopus this will rise to £1,921 for existing customers, with new customers getting a reduction of £2 on the price cap at £1,969. The firm says it is also doubling its hardship fund which it has used to help customers struggling with their bills, with this increasing to £5million. Combined with the price cap rebate Octopus says it is providing £50million in support of its customers.
Rising energy bills have become one of the biggest factors in the growing cost of living crisis facing households this year with wider inflation also at record highs and pressure coming from tax and national insurance increases.
Analysis by energy experts Boiler Central recently found Google searches for phrases such as “help with energy” and “can’t afford energy” had exploded in recent weeks.
Greg Jackson, founder of Octopus Energy Group, said: “We’re gutted to be increasing prices like this, but with the cost of energy being up to five times higher than last year it’s absolutely unavoidable.
“We’ve already absorbed £100million of the costs on behalf of customers, and we’re choosing to absorb another £50million here by keeping costs for existing flexible tariff customers well below the cap – and much lower than any other large company.”
Customers will receive letters in the coming days with their individual predicted costs when the cap rises.
Octopus is the UK’s fourth biggest energy provider and took on over half a million customers as large numbers of firms left the market last year.
In total over two million households have had to switch energy supplier in the last year as soaring wholesale prices saw record numbers of energy companies collapse.
In a recent poll by Money Saving Expert only E.on Next and Octopus emerged with overall positive feedback from customers who had been moved, with British Gas emerging as the worst- ranked poor by 58 percent of those transferred.
While customers now have a degree of certainty for the next six months, concern is already building for what might happen to the energy price cap in October when it is next reviewed.
Speaking recently to Express.co.uk CEO of Good Energy Nigel Pocklington warned the UK was “entering a period of much higher energy prices for a couple of years”, predicting October could see the price cap go to as much as £3,000.
Ofgem are also consulting on changes to the methodology of the price cap with a potential future change being the ability to update it more regularly than every six months if needed.
Energy prices had been predicted to begin to fall in spring however the unfolding situation in Ukraine has added new pressures, threatening to take prices higher still.
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Gas and oil prices have increased considerably since the conflict began with recent news of a potential ban on Russian exports taking oil as high as $139 (£105.41) on Monday morning.
Although the UK is less reliant on Russia for its energy than many other European countries, the effects are still pushing up global wholesale prices leaving British households with higher bills.
Peter Garnry, Head of Equity Strategy at Saxo Bank, commented: “The galloping commodity prices will naturally put downward pressure on the economy and increase operational volatility for many companies already struggling with inflationary pressures.
“An import ban on Russian oil and gas would immediately put Europe into a rationing mode to preserve and allocate oil and gas to the most important sectors of the economy first.”