Energy watchdog Ofgem announces new plans to ease bills set to soar to £2,000-a-year in move that could save customers £100 each
- Watchdog Ofgem sets outs new plans to soften the energy price surge in April
- Ofgem consulting changes to spread cost bailing customers of failed suppliers
- Around 25 UK energy suppliers collapsed since August due to price increasing
- Cost of gas in wholesale markets rose by more than 500% in less than 12 months
Energy regulator Ofgem has laid out plans to ease bills which could treble to more than £2,000 a year in a new move to combat soaring gas prices.
Fears of runaway household bills in the new year have been mounting since rising gas prices began bankrupting suppliers in September.
Since then, they have rocketed from 54p per therm of gas to a staggering £4.50, forcing as many as 26 suppliers out of business.
Households are expected to see a severe hike in the cost of their energy in April as suppliers are due to increase prices in line with soaring wholesale costs after changes to an industry price cap.
As a result, millions of households and businesses have been passed on to new providers, so-called suppliers of last resort.
But energy watchdog Ofgem said it is consulting on changes, which would spread the cost of bailing out the customers of failed suppliers potentially over several years – instead of one larger hit to costs.
Energy regulator Ofgem has laid out plans to ease bills which could treble to more than £2,000 a year in a new move to combat soaring gas prices
On Thursday they said it could help to reduce the bills of customers and spare customers a levy of up to £100, according to the Financial Times.
A spokeswoman for the regulator said: ‘Ofgem’s safety net has protected more than four million customers through the unprecedented global gas prices this year, making sure they have an energy supplier and household credit balances are honoured.
‘This comes at a cost, which we always seek to minimise. We, with government and industry, are considering ways to mitigate the impact of these claims on consumers.
‘This includes exploring options for spreading the cost over a number of years which would help reduce household bills from April 2022, such as via a third party (re)financing option, for which we have published a consultation today.’
Earlier this month, the watchdog said energy suppliers that took on the customers of failed rivals will be able to claim back more than £1.8 billion by adding it to the bills of households and businesses.
Regulator Ofgem said it had approved payments to eight suppliers, with the biggest made to Octopus Energy, which took on the highest number of new customers.
Employees could see bills rise 18% to £868 to cover the extra costs of heating and electricity
This news comes as it was revealed energy companies could be handed billions of pounds of Government loans next year to protect families from surging gas prices.
Whitehall officials are said to be working on a loan scheme which would make it possible for firms to avoid having to impose massive increases on household energy bills.
The cash would enable companies to spread the currently spiking cost of wholesale gas over a decade, so they would not have to pass it on to consumers in one big hit.
Ministers are considering the plan, according to The Times, but officials believe the figure of £20billion which has been requested by the industry is ‘far too high’.