The move comes as the government works to impose a wider cap to tackle what Prime Minister Theresa May has called “rip-off energy prices”. Home power bills have doubled in Britain over the past decade to an average of about 1,150 pounds a year.
Ofgem introduced the so-called safeguard tariff for more than 4 million pre-payment customers last year, and last week the cap was extended to cover a million more vulnerable customers.
From April 1 the average cost of the safeguard tariff will rise almost 6 percent, to 1,089 pounds a year from 1,031 pounds a year, for dual-fuel customers using gas and electricity.
Ofgem said the increase was needed to allow energy firms to recoup extra costs due to rising wholesale energy prices and to help pay for low-carbon power generation such as wind and solar.
“Even when energy costs rise, people on the worst deals are better off under the safeguard tariff as they can be sure that they are not overpaying for their energy and any rise is justified,” Dermot Nolan, chief executive of Ofgem, said.
However, during a conference call with journalists, he said the higher safeguard price was not a “green light” for energy suppliers to raise costs for other customers.
Despite the safeguard tariff, switching energy supplier can still be a more effective way to save money.
“By shopping around and switching tariff today households can save 250 pounds or more,” said Stephen Murray, energy expert at comparison site MoneySuperMarket.
($1 = 0.7203 pounds)
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