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More than five million of the UK’s most vulnerable households are facing an average rise of £57 a year in their energy bills.

As reported by The Mirror, the regulator Ofgem said it was increasing the level of its safeguard tariff from April 1, meaning the average dual fuel bill will rise from £1,031 to £1,089 a year due to higher gas and electricity costs.

The move comes after the energy watchdog extended its so-called safeguard tariff to a further one million vulnerable customers on February 2, taking the total number of households protected by the energy tariff to more than 5 million.

Energy bills savings down from April

The extra million households will start by saving £115 a year, because suppliers have to cut their prices to below the level of the safeguard tariff cap, but from April the savings will be reduced to an average of £66 a year.

Ofgem updates the safeguard tariff every six months based on estimated costs and will be reducing savings under the current price cap because the cost of producing energy is expected to rise in the Spring, in addition to increased government policy costs.

Energy bills are increasing

Dermot Nolan, chief executive of Ofgem, said: “Protecting vulnerable customers is a priority for Ofgem. That’s why we have extended the prepayment safeguard tariff to almost 1 million vulnerable households, which will help deliver a fairer, smarter and more competitive market for all consumers.

“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.”

Safeguard tariff no longer cheapest deal

The tariff was initially introduced solely to households who pre-pay for their energy, mostly with traditional coin or token-operated pre-payment meters, and is designed to protect customers on the worst-value deals from being charged too much by suppliers.

These changes mean that the safeguard tariff is not the cheapest deal out there and anyone overpaying on a poor value tariff should look into switching as they could save hundreds on energy costs.

Eventually the government is planning to cap the bills of everyone on expensive standard variable tariffs.

If that legislation has not been passed by next winter, Ofgem plans to cap the bills of a further two million households.

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