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Energy cap loophole means half a million heating customers facing rise of MORE than £600 to bills – are you affected?

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ENERGY regulator Ofgem is being urged to close a loophole that excludes households on communal heating systems from the price cap.

Experts warn that the treatment of these residents as commercial customers means they are losing any protection from price hikes.

Households on shared heating systems are being left without the protection of the price cap

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Households on shared heating systems are being left without the protection of the price capCredit: Alamy

Record wholesale gas prices have been pushing up energy bills since the end of 2021.

Ofgem increased its price cap, which is meant to limit what out-of-contract customers pay for their gas and electricity, from £1,138 to o £1,277 in October and more increases are predicted this April.

Consultancy Cornwall Insight has predicted that energy price cap could rise by an extra £600 in the coming months.

The increased wholesale prices have also put pressure on smaller suppliers and almost 30 closed last year, reducing competition in the market.

Most residents are being told they are currently better off sticking with price cap tariffs due to a lack of competitive deals.

But energy experts are warning that households on shared heating systems are being left without the protection of the price cap and face paying up to 300% more for their heating compared with most other residential users.

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There are around 17,000 communal heat networks supplying almost 500,000 UK customers.

Families who live in blocks of flats or developments with a communal electricity supply and one meter are treated as commercial rather than residential customers.

This means they are excluded from the energy price cap.

If, as predicted, the cap increases by up to £600, these residents will be left paying even more as they have no protection from price rises.

They can’t shop around as it is the property block owner who agrees the energy supplier and then recharges residents.

Block owners have a duty to find the best value rates but Ginger Energy, a consultancy that helps secure energy deals for apartment blocks, warns rising energy costs and the lack of a cap means residents are missing out.

Lisa Gregory, director of Ginger Energy, said: “We are about to have to tell the residents of some blocks that they will be paying four times the previous unit charge for their energy.

“While normal residential consumers are protected – at least for a period – through the price cap, the consumers in these blocks are fully exposed to the market changes – as all are classed as business users despite actually being domestic users.”

She warned that many residents may struggle to pay the new costs and will then get into debt.

Ginger Energy is calling for Ofgem to include these types of residents in the price cap and is urging property managers and consumer group The Heat Trust to support its campaign.

Gregory added: “In the current market commercial tariffs are up to 300% higher. How would your behaviour at home or business change if your electricity bill went up 300% overnight?

“Sadly, some residents don’t understand the gravity of what’s happening. It’s only when they receive the first bill they realise.

“While we know of others among our industry who don’t consider the price cap fit for purpose, we want to go further and urgently highlight how many communal supply residential customers are not covered by the cap.”

A statement from Ofgem said: “Higher energy bills are never welcome and any customer worried about bills should contact their supplier to access available support.

“Ofgem’s remit does not currently include regulating heat networks, however the government has set out proposals to regulate the sector, including appointing Ofgem the regulator for heat networks.

“This will ensure heat network customers, especially those in vulnerable circumstances, receive a fair price and reliable supply of heat for their homes as we make the transition to net zero.”

This post first appeared on thesun.co.uk

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