British households may face a significant increase in their energy bills from the beginning of April due to the corona virus, based on new proposals from Ofgem.
The regulator proposes an increase to the maximum that many households can be settled on the account, because the pandemic is putting energy companies under pressure.
Ofgem said it is considering a Covid increase of £ 21 per household to the standard price cap when it next comes up for assessment.
This is in addition to any other changes in the amount energy companies can charge customers on their standard rates.
The current price cap, which runs from October 2020 to the end of March 2021, is set at £ 1,042 per household for both gas and electricity.
Ofgem reviews this cap every six months, and it was already widely expected to increase the cap in February when it announced the new cap that will take effect in early April.
Energy prices have fallen in the last three consecutive assessments. However, wholesale energy prices have recovered from the lows they hit earlier this year when fuel demand collapsed due to the Covid-19 crisis.
Ofgem said the potential £ 21 increase will help take some of the pressure off energy companies dealing with high levels of unpaid bills as households struggle to keep up during the pandemic.
The increase will allow them to recover some of the estimated £ 200 million in bad debts collected by customers.
The consultation on the proposals will run until December 21, and Ofgem will share its decision in February before the new price cap is announced.
Many of Britain’s largest energy companies have been forced to lay off thousands of workers under pressure from Covid.
E.On became last on Thursday when it announced that about 695 jobs will be cut. It followed Centrica, which announced 5,000 cuts in June, and Ovo, which said it would cut 2,600 jobs in May.
Some of these jobs have probably been cut anyway, but Covid-19 has put a lot of pressure on companies.