Energy Sector seeking Government Support as Coronavirus bites, 2020 Energy Price Cap now in effect

With many people finding themselves in financial difficulty as a result of the lockdown, a growing number are cancelling their payments to their energy suppliers as they seek to save money. The number of cancellations is reported to be growing which could lead to energy suppliers themselves coming under financial pressure.

According to the Financial Times, energy companies are seeking a £100 million per month loan facility from the government to grant payment holidays to their most vulnerable customers.

“In addition to suppliers’ efforts to provide additional help and support for customers in vulnerable circumstances and those on prepayment meters, there are also going to be many more households and businesses than usual who will struggle to pay for essential services like energy bills. On behalf of the industry, we are leading discussions with the Government on what additional financial support could be required to help these customers over the coming months.” Said an Energy UK spokesman.

Ofgem’s latest energy price cap comes into force today and should result in millions of energy consumers start to see lower energy bills.

Lower energy bills should be a welcome relief for many people who are now stuck at home and using far more energy than they normally would thanks to the deadly Covid-19 virus pandemic. However, with the maximum price set to fall by just £17 per year consumers may have wanted a cap with more an impact.

The new price cap is slightly less than the figure used when first announced back in February. The new cap is £1,127 per year and the slight change is due to how Ofgem calculates typical usage. In normal circumstances, the average household’s electricity use was expected to drop but in these unprecedented times, the opposite of this in most cases is occurring. Energy bills could rise by as much as £5 a week as more people work from home despite the change in the price cap.

The price cap level for prepayment tariffs is also falling by £17 per year today, to £1,165 per year.

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