British Gas, the largest energy supplier in the UK, has reportedly confirmed plans to increase the cost of its standard variable energy tariff by £97 a year. The decision comes less than a fortnight after Ofgem announced plans to lift the cap to an annual average of £1,138 for dual fuel bill.
This is expected to cause millions of British Gas customers to pay nearly £100 a year more for their electricity and gas after the regulator lifted the cap on energy bills.
According to reliable sources, Ofgem’s price upsurge comprises a £23 hike for helping suppliers such as British Gas in claiming back the cash that they missed on account of unpaid bills amid the COVID-19 pandemic. The regulator stated that the allowance would aid energy suppliers make provisions for emergency financial help or payment plans to protect their clients, primarily those in vulnerable circumstances.
However, Ofgem has still allowed energy suppliers to follow up on customers for unpaid debts with the help of debt collectors, cite sources knowledgeable of the matter.
As per a British Gas spokesperson, the price would be set to the maximum level enabled by the regulator. Other prominent energy suppliers are also estimated to increase bills for nearly 11 million households on standard energy tariffs.
This is because Ofgem, which defines the upper limit for the average default energy bill on the basis of the costs of supplying energy, has given suppliers the opportunity of raising their tariff prices. Further, a spike in the global energy commodity prices has escalated the cost of sourcing gas from the wholesale market, leading to a higher cap.
As per sources, British Gas is the first key energy supplier to act after the energy cap surge, which is expected to affect 2.3 million of its clients who utilize the default energy tariff and bring an extra net revenue of £230 million to the energy company.