E.ON, SSE and Scottish Power announce price rises in line with Price Cap increase, more suppliers likely to follow
More energy suppliers have announced that they will be raising energy bill prices for millions of customers in line with the energy price cap rise.
More energy Suppliers are expected to hike prices
E.On, SSE and Scottish Power are the latest suppliers to announce price increases on their standard tariffs with them expected to increase by £139 a year, the maximum amount allowed by Ofgem.
The move by the two suppliers follows that of EDF who announced price hikes last week.
Customers on default tariffs paying by direct debit will experience the sharpest price rises since the introduction of the price cap, with the average yearly energy bill expected to be £1,277.
Customers on pre-payment meters will also see prices rise from £1,156 to £1,309.
The major factor sending the energy price cap higher are record high wholesale energy prices. The reopening of much of the global economy following the easing of Covid-19 restrictions has seen demand for energy surge across the globe.
update - Ovo Energy, the UK’s second largest energy supplier, will raise the price of its standard dual-fuel energy tariff by 12.25% to an average of £1,276.49 a year from 1 October, just 51p shy of the cap set by Ofgem this month.
Also read: EDF becomes first Energy Supplier to hike Energy Bills in line with the next Price Cap Level
Why did E.On and Scottish Power raise their prices?
Not all energy suppliers will hike their prices in the face of the increased price cap. In fact, some smaller suppliers are expected to keep their prices at current levels or in some rare cases lower them in the hopes of attracting new customers.
This tactic comes with risks, however, with some energy experts warning that such pricing strategies could see an uptick in the number of suppliers being forced to close.
An E.On spokeswoman gave the company’s reasoning and gave a warning to suppliers considering not to raise their prices.
“Ofgem reviews its price cap twice a year, setting a fair price for energy and reflecting the current state of the market.
“Following Ofgem’s latest update, we are in the process of writing to customers to inform them we will be changing our standard variable tariff prices from October 1. There will be no change to our prices between now and that date.
“Ofgem’s latest update was driven by a more than doubling of global gas prices in the last six months and there’s almost nothing suppliers can do to change those market costs.
“Suppliers cannot sell products for less than they cost to buy, or the entire industry becomes loss-making, and the UK won’t have sustainable companies supplying its energy.
“In the last three years, more than 30 suppliers have left this market, many because they set unsustainably low tariffs and could not respond to market changes.”
Also read: Worries grow over possible wave of small energy supplier failures in October
Dyball Associates will keep you informed of the latest industry changes and our team of energy market consultants can guide you through the steps to enter the UK energy market. Whether you’re looking for electricity and gas software systems or support on starting an energy supply company, Dyball Associates can help.
Further Reading
How long does it take to switch energy supplier and how can suppliers ensure they make them quickly?
Energy Suppliers, are you ready for the Green Gas Support Scheme and Green Gas Levy?
Total Number of Installed Smart Meters surpasses 16 million
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Through our energy market consultancy services, and the software we’ve developed, we’re supporting new UK electricity and gas suppliers get set up and start supplying.
For more information on how to start and manage an energy company, get in touch with Dyball Associates today.
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