The energy price cap and what it really means

It’s a worrying time financially for millions of customers, with households in England, Scotland and Wales facing the steepest ever increase in bills amid a record rise in global gas prices.

With the regulator Ofgem last week announcing an energy price cap rise of 54%, customers are understandably anxious about their ability to pay the bills.

As everyone now knows, the energy price cap is to increase from 1 April and will affect around 22 million customers – with those on default tariffs paying by direct debit set to fork out, on average, an additional £693 for energy per year – going from £1,277 to £1,971.

Prepayment customers can also expect an annual increase in bills of £708 from £1,309 to £2,017. 

The announcement of the cap increase was brought forward following weeks of speculation that has left customers – many already struggling financially due to the impact of the Covid pandemic and increasing inflation – fearful of their ability to meet the unprecedented increase in costs to power their homes and in some cases facing the choice of ‘heat or eat’.

Overall, they are significant, but not wholly unexpected rises.

However, concern and financial anxiety has continued to grow after Chancellor Rishi Sunak warned Britons to brace for even higher energy costs in autumn with Ofgem giving itself power to make more frequent, emergency changes to the price cap to address the volatility in the market.

Currently, the cap on what suppliers can charge can only increases every six months. But with energy suppliers facing an enormous rise in the price of fuel, many have spent months selling at a loss, leading to dozens going out of business. Ofgem said the ability to change the cap more often than twice a year will reduce this risk for suppliers.

But that will come as little comfort to many households, whose finances are already being squeezed by a cost-of-living crisis that has also seen food prices soar. Almost three million households were already behind on their energy bill payments even before the last price rise in October 2021.

Families are going to be hit hard financially, and energy companies need to be proactive in the way they deal with their customers’ justified concerns.

Awareness of the changes are high, and suppliers should expect a surge in customer contact as customers seek to clarify how it impacts them and what options are available for support

The surge is likely to be short in duration, but suppliers should be prepared for a high peak.

Energy suppliers will be starting to notify their  customers of the increase and this may come as a shock for those who haven’t been kept abreast of the impending changes, whilst also informing them of the possible measures the government plans to soften the blow – currently a £200 loan that will be paid back over the next five years.

This initial surge in contact is likely to be followed by another spike in customer engagement in April when prices actually rise and customers struggle to pay their bills.

Further contact should be expected later in the year when Direct Debits will need to increase. A surge in complaints and customers contacting to cancel Direct Debits will also land when the increases come into force, along with Prepayment customers self-rationing or self-disconnecting.

Being prepared is key for all suppliers during this time of huge turmoil for the industry and its customers.

More than anything, suppliers must make sure customers are aware that support is available, be prepared to proactively review customers’ Direct Debits without waiting for an influx of calls further down the line and put processes in place that can highlight changes in behaviour of prepayment customers to enable you to provide suitable advice and guidance throughout.

A huge surge in customer contact is a guarantee in the coming weeks and months – and so suppliers need to have the infrastructure in place to cope with the inevitable increase in demand.

Sigma’s expertise

At Sigma Connected, we have been able to support suppliers with short term spikes by simplifying the traditional drawn out and sometimes costly outsourcing process.  Our track record to date shows we can be live within 3 days of being instructed.

Our ‘National Work from Home’ model gives us access to a national, temporary, resource pool of customer services workers, while IT is streamlined and simplified with our Bring Your Own Device system for staff.

With training time also drastically reduced by a comprehensive FAQ as the majority of questions will be the same. If we can’t link into CRM systems we can at least take the initial triage and deflection from the main call centre.  This simplified outsourcing process means there are no big set-up costs for suppliers or a requirement for long-term contracts.

These fundamental changes have already proven a huge success with the recent Supplier of Last Resort campaign – introduced to help companies hold on to the valued customers they have so painstakingly acquired amid the energy crisis – with large teams of staff stood up within days to manage customer contact during peak times.

During an unprecedented time of uncertainty and anxiety for both suppliers and their millions of customers, having the ability to engage, support and ride the storm together will be more crucial than ever before.

For further information or a wider discussion on how we can help your business, contact us below.


About the author


Rob Sawle is Sigma Connected’s Director of Energy Services.

You can contact Rob via email or connect with Rob on LinkedIn.



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