Energy bills are to rise for millions at a time when finances are hit through the Covid-19 pandemic.

It comes after the regulator Ofgem said suppliers could pass on the cost of rising gas and electricity prices to customers.

It  said the price cap for default domestic energy deals will go up to cover suppliers' extra costs.

The typical gas and electricity customer is likely to see their bill go up by £96 to £1,138 a year from April 1.

Charities say the timing is a "double whammy", coming at a time when the government's Covid-related support schemes are due to be wound down.

Natalie Hitchins, head of home products and services at the consumer organisation Which?, said: "Energy customers will be left reeling by this increase to the price cap which allows suppliers to raise the prices of their default tariffs to where they were before the pandemic, putting further strain on households struggling with rising bills due to increased usage during lockdown.

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"Anyone struggling with their energy bills this winter should contact their provider for help. Energy suppliers must also continue to ensure support is easy for consumers to access.


"Customers on standard or default tariffs who want to avoid a price hike should switch to a different provider or deal as this remains the best way to keep your bills down. Do your research, shop around and switch - you could find a deal £260 cheaper than the new price cap level."

Ofgem said rising wholesale costs were behind the increase, adding that the existence of the price cap meant households saved £100 a year, and they could also switch to a better deal.

A further four million households with pre-payment meters could see their bills jump by £87 to £1,156.

Ofgem insists the price cap "protects consumers" who have not switched energy supplier by ensuring they pay a fair price for their electricity and gas.  

Jonathan Brearley, chief executive of the regulator, said:  "Energy bill increases are never welcome, especially as many households are struggling with the impact of the pandemic. We have carefully scrutinised these changes to ensure that customers only pay a fair price for their energy.

"As the UK still faces challenges around Covid-19, during this exceptional time I expect suppliers to set their prices competitively, treat all customers fairly and ensure that any household in financial distress is given access to the support they need."

The decision comes on top of an additional £23 rise that energy suppliers have been allowed to charge customers for bad debt.

During the crisis the companies have struggled to get some households to pay their bills, so Ofgem decided they needed to allow the suppliers to spread that cost across the country.

The latest announcement more than wipes out the gains that households made in October, when the price cap dropped by £84 to a record low since the policy was introduced in January 2019.

Ofgem reviews and changes the price cap once every six months.

Richard Neudegg, head of regulation at the energy price comparison site, said: “The pandemic has already placed many households under great financial strain. This will be a bitter pill to swallow for the 11 million default tariff customers with standard meters, many of whom are already struggling to make ends meet.

“The price cap increase is an aftershock of last year’s lockdown, partly because many customers have struggled to pay their energy bills, plunging them into debt that suppliers have been unable to recover. 

“With more of us at home, usage remains high and energy costs hike, there’s a very real danger that the rising price cap will end up trapping households on default tariffs into a vicious circle of energy debt. 

“The largest contributor to the price cap increase is the dramatic rebound in wholesale energy costs since the first lockdown. "

 Mr Brearley argued that it would be better to make a change now when the country is heading into the summer, a time when energy usage is lower, than in October, ahead of winter.

However, Citizens Advice acting chief executive Alistair Cromwell called the increase “a heavy blow to a lot of households”, and said it would come as benefits are also slashed for many.

“For many people on Universal Credit it will come at the same time as the £20 a week increase to the benefit is set to end,” he said.

“With a tough jobs market and essential bills rising, now is not the time for the Government to cut this vital lifeline”.

Emma Pinchbeck, the chief executive of Energy UK, a trade body for energy suppliers, said that the price cap is set in a way that is meant to be fair for both customers and suppliers.

“Today’s rise reflects that the cost of buying energy – by far the biggest part of the bill – has risen significantly over the last few months. It also includes a greater allowance for debt given the difficulties many customers are facing in paying bills at present,” she said.

The £1,138 annual cap is calculated based on the usage of an average household. Energy suppliers are required to price below that cap. Most set their prices a couple of pounds below the cap level.