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Fuel bills may rise ahead of October price cap hike

Anxious woman looks at bills

Anxious woman looks at bills

Energy bills could rise ahead of an expected rise in October, the UK’s energy regulator has revealed.

Ofgem and industry body Energy UK said it was “possible” for suppliers to increase customer direct debits before the new cap on energy prices kicks in.

Any rise would help spread the cost of higher energy use over the winter months, Ofgem said.

Households have been warned of a sharp rise in fuel prices, with average bills forecast to reach £4,200 in 2023.

Direct debits are usually charged in a way so that customers build up “credit” when consumption is lower in the warmer summer months, spreading the cost of using more energy in the colder months.

“It is therefore possible for direct debits to increase ahead of price cap rises or even when consumer consumption is stable,” an Ofgem spokesman said.

However, Ofgem said customers can ask their excess credit “to be returned at any time and contact their provider to change how their direct debit is spread”.

“For example, they pay exactly what they use that month and don’t build credit ahead of winter,” Ofgem said.

Money Saving Expert’s Martin Lewis told the Today program that they would “start to increase immediately on 26 August before the new Prime Minister comes into office” after Ofgem confirmed that direct debits could increase before October.

“As soon as the announcement is made by Ofgem on August 26, it will crystallise direct debits,” he said.

British Gas has told the BBC it will not increase its direct debits before October 1. The BBC has contacted EDF, Eon, Ovo Energy and Octopus for comment.

Energy UK, the energy industry trade body, said direct debits are “regularly reviewed” by suppliers taking account factors including estimated consumption, current tariffs, debit/credit balances and recent meter readings.

“Hence, some consumer direct loans are likely to change before October,” a statement said.

“All suppliers must, however, ensure that direct debits are set correctly, based on all relevant information available at the time of review, and communicate any changes in a way that helps customers understand their energy payments.

The new price cap – the maximum suppliers can charge customers for energy use in England, Scotland and Wales – will be announced later this month, but will come into force in October.

Consultants Cornwall Insights expects this to rise to £3,582 a year, due to the ongoing war in Ukraine driving up global wholesale gas prices and warning of further rises over the winter.

Ofgem said protecting consumers was its “top priority”, adding that “suppliers should ensure that direct debit payments are based on the best and most current information available to them”.

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