The energy price cap was first introduced as a way of protecting the most vulnerable customers from being ripped off. Far, far too many people have been overpaying for their energy bills (still an estimated 11 million) and no one is under any illusion that the energy market is fair to consumers.
The energy price cap limits the price a supplier can charge for their standard variable tariff. Unfortunately, it would appear that the price cap has had some unintended consequences.
Our research shows there have been a huge 42 price rises so far this year.
2018 was the worst year on record for price rises, with 57 in total. This time last year there had only been 15, meaning we are on course to beat last year’s record.
| Price rise key figures | 2017 | 2018 | 2019 so far |
|---|---|---|---|
| Total number of price rises | 15 | 57 | 42 |
| Suppliers who raised prices | 14 | 35 | 42 |
| January – June price rises | 10 | 15 | 42 |
| Average price rise | 86 | 75 | 110 |
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Why is this significant?
42 price rises far exceeds the levels we were seeing back to 2013 onwards.
Higher than ever before
These are the highest price rises ever seen from the Big Six.
The Big Six still occupy a huge monopoly over the energy market, so an estimated 11 million households will feel the effects of these price rises.
| Supplier | Biggest price rise 2018 | Biggest price rise 2019 |
|---|---|---|
| British Gas | 60 | 117 |
| EDF | 70 | 117 |
| Eon | 55 | 117 |
| Npower | 64 | 117 |
| Scottish Power | 63 | 117 |
| SSE | 76 | 117 |
-These are individual price rises
The worst offenders
The worst price rises in fact come from the smaller suppliers. The biggest being a huge jump of £162 from Ebico and £144 from Tonik Energy.
| Supplier | Standard Variable Tariff | Previous cost (£) | New cost (£) | Difference (£) | Difference (%) |
|---|---|---|---|---|---|
| Ebico | Ebico Evergreen paperless | 1092 | 1254 | 162 | 0.15 |
| Tonik Energy | Life Energy | 1048 | 1192 | 144 | 0.14 |
| Qwest Energy | Qwest Energy Standard Flex | 1115 | 1240 | 125 | 0.11 |
| Spark Energy | Move-in Saver | 1130 | 1253 | 123 | 0.11 |
| Engie | Safe And Easy | 1106 | 1226 | 120 | 0.11 |
How have we ended up with more price rises?
What is key to understanding the price cap, is the fact that suppliers set their own standard tariff. They simply cannot go beyond the price cap limit.
As a consequence, what we have seen is the vast majority of suppliers, not only raising their prices, but pricing very close to the price cap limit.
Therefore the price cap – in a perverse twist of fate – appears to have opened up the door to price rises.
This has added a collective £1.2 billion to people’s energy bills.
Is this to be expected of the price cap?
Firstly and perhaps most importantly wholesale energy costs have been dropping every month of this year. It’s therefore quite baffling as to why so many suppliers are putting up energy bills.
This was never the intention of policymakers bringing in the cap.
Nonetheless the sheer number and scale of price rises this year raises serious questions about whether the price cap is as effective as it should be.
