Ofgem has updated the level of the safeguard tariff, which protects 5 million households from being overcharged, based on the latest estimated costs of supplying energy.
From October 1, the level of the safeguard tariff will rise by £47 per year for dual fuel customers to £1,136.
Ofgem is currently working to put in place a price cap for the remaining estimated 11 million households on poor value default tariffs by the end of the year following publication of a statutory consultation later this month.
The main driver of higher wholesale costs has been in the increase in the global oil price, which has risen by from $50 per barrel to $75 per barrel since this time last year. As the price of the gas Britain imports from Norway and the rest of Europe is linked to the oil price this has pushed up the price of gas which heats our homes and is also used gas fired power stations to provide around 40% of our electricity. In addition to this there have been increases in the cost of carbon trading which again has made the gas and coal we use more expensive.
It is also estimated that the majority of households are not benefiting from the option to switch suppliers.