Ofgem announces price hike affecting millions of households

Changes due to take place in October 2021

In July, Ofgem warned that energy bills would be rising this winter highlighting the challenges of the last 18 months alongside the increasing price of fossil fuels at an “unprecedented rate”.

This culminated in today’s announcement confirming the impact on customers energy bills. It’s significant not only for the level of the increase – a rise of at least £139 – the price caps highest ever level, but over the course of the pandemic heightened coverage of how households have been struggling to afford their household bills (Ofwat, #ListenCareShare).

Described as a “devastating increase” by Peter Smith, National Energy Action, the advice to customers to look at switching providers is an option that those struggling today, already in arrears and experiencing fuel poverty, don’t have.

Ofgem recommends customers who are concerned and are struggling to get in touch with their providers to access support

The importance of alerting your supplier

“We’d encourage any customer, particularly those struggling to pay their bills, to contact their supplier, and get access to a wide-range of help and support,” Jonathan Brearley, Ofgem Chief Executive.

The announcement will no doubt cause significant concern to customers, especially those most vulnerable. Energy companies free support service, the Priority Services Register is designed to support customers who are in vulnerable situations and for most customers, they need to contact their individual supplier to confirm their eligibility and get registered. According the CCW’s Vulnerability Manifesto published last November, only PSR awareness is only at 42%, demonstrating how the size of the challenge to get the right support quickly to those who need most.

Although the changes will not come into effect until October 2021, that leaves customers and energy companies just two months make adjustments, changes or request/deliver support.

Debt crisis on a knife-edge

Uswitch’s recent research highlights the knife-edge that many households are on when it comes to managing their finances, with a reported 7 million just £10 away from falling into debt.

Coupled with the end of the furlough scheme and the anticipated steep increase in consumer debt levels, this will no doubt put a strain on current customer support systems that are unable to scale up at speed or offer diversified support channels that make it easier for customers to communicate and share essential information to access specialised support.

Similar companies and regulators will be watching closely to see how customers and their suppliers cope over the coming months.