Energy price cap branded "con" as Scots energy bills set to rise by up to £184 a year

The energy watchdog said it would increase the typical price cap for UK default and standard variable gas and electricity tariffs by £117 to £1,254 a year from April 1.

The price cap for UK pre-payment meter customers will also rise - typically £106 to £1,242 a year from April 1.

While consumers hit by the potential price rises were encouraged to switch suppliers to find the best deal Britain's leading consumer organisation warned that the cheapest deals have been vanishing from the market fearing it is to make up for a loss in revenue.

USwitch.com, the price comparison service, warned that larger families in Scotland could see their annual bills rise by up to £184 a year, as the cap is on the rates which suppliers can charge on each unit of gas and electricity used

Pensioners in Scotland on standard variable tariffs are more likely to be looking at around a £130 increase, on the assumption that they probably live in slightly smaller properties with fewer people at home with them, uSwitch added.

Age Scotland warned the price rises would do nothing to tackle fuel poverty and makes "a mockery of the term 'cap'".

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Adam Stachura, Age Scotland’s head of policy and communications said: "This change and increase is going to be hard to swallow for those already having a tough time paying their energy bills. It sends a confusing message to older people who thought help was at hand."

Official figures show that in 2017, before the cap came in, one in four households across Scotland were estimated to be in fuel poverty, by spending more than 10% of their income on household fuel to maintain satisfactory heating.

The Scottish Government has a proposed new statutory target for fuel poverty that in 2040, no more than 5% of households in Scotland are in fuel poverty.

Which? said the cheapest tariffs plummeted as suppliers adjusted their operations in the run-up to the cap’s implementation in January - and things have since got worse.

It is concerned that energy companies are holding back their cheapest deals leaving customers short of a choice of good-value deals.

In December Which? found that the number of energy deals costing less than £1,000 a year for medium users had dropped from 77 in January to eight. As of Monday, February 4, there were just six.

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A spokesman for the consumer organisation said: "We are calling for the regulator to closely monitor and report on how the cap affects cheaper deals on the market to ensure that customers will still be encouraged to switch and save money."

Eon, EDF and Npower have already raised their standard variable tariff by about £117 to an average of £1,254 in April. That is the maximum they are allowed to charge under the cap.

The rest of the Big Six energy suppliers, Perth-based SSE, Glasgow-based Scottish Power and Scottish Gas are expected to follow suit. Theresa May insisted in the Commons last week that the cap "provided protection to 11m households and energy suppliers will no longer be able to rip off customers on poor value tariffs".

She insisted: "It will save consumers a total of 1 billion pounds on their bills annually. And the Citizens Advice Bureau has previously said that the cap means people are paying a fairer price now and will continue to pay a fairer price, even if the level of the cap rises."

USwitch says that as Scotland is made up of two separate energy regions, the cost of supply varies slightly, so the average increase for households in the northern half of Scotland is £103 per year, whereas in the southern half of Scotland will be faced with £114 per year.

Rik Smith, energy expert at uSwitch said the "price cap is a con because of the suggestion is that households are protected now the cap is in place" and Citizens Advice Scotland said the cap rise was "concerning".

Mr Smith said: "Before the cap came in, when energy suppliers raised prices they would point to wholesale and policy costs as the main reason for the increase, which would usually earn them quite a lot of criticism.

"Yet Ofgem has just done exactly the same thing and three of the largest suppliers have predictably announced that they will price up to the new cap level.

"Ofgem had to design a model which reflected the cost of buying and supplying gas and electricity. But the model quickly passes cost changes to customers and makes it more likely that suppliers will align their buying strategies (known as "hedging") for standard variable tariffs closely to the price cap methodology.

"The result is confusing messaging for consumers, the prospect of twice-yearly price changes, and as we're seeing at the moment, hefty bill hikes for hard-pressed households."

Grant McColm, energy policy manager at Citizens Advice Scotland said: "Although the price cap was always meant to fluctuate with wholesale prices, this was a very large increase. "The price cap was designed to protect consumers from the most expensive tariffs, however it doesn’t protect them from overall energy price rises.

"The underlying problem is that energy is becoming increasingly unaffordable as wholesale prices rise, putting more strain on household budgets and pushing more Scots into fuel poverty.

"That’s why we’re encouraging Scottish consumers to continue to shop around for the best deal."

Age Scotland's Money Matters project found 54.5 % of elderly people are particularly vulnerable to fuel cost increases, with 38% “squeezed” and 3% “struggling” with increasing bills.

Adam Stachura, Age Scotland’s head of policy and communications said: "This change and increase is going to be hard to swallow for those already having a tough time paying their energy bills. It sends a confusing message to older people who thought help was at hand," he said.

Age Scotland research highlights that 6 in 10 single pensioner households and 4 in 10 pensioner couples in Scotland find it hard to afford the bills from their energy supplier.

"So an increase at the levels suggested will do nothing to tackle fuel poverty and will make it harder for the Scottish Government to meet its target to eradicate it over the next 20 years," Mr Stachura warned.

An Ofgem spokesman said: “Under the caps, households on default tariffs are protected and will always pay a fair price for their energy, even though the levels will increase from April 1.

“We can assure these customers that they remain protected from being overcharged for their energy and that these increases are only due to actual rises in energy costs, rather than excess charges from supplier profiteering.

“Alongside the price caps, we are continuing to work with government and the industry to deliver a more competitive, fairer and smarter energy market that works for all consumers.”

The cap follows an announcement by the competition watchdog last year suggesting that radical reforms to the way the insurance, mortgage, mobile phone and broadband markets operate after finding that loyal customers are being ripped off to the tune of £4bn.

First introduced on January 1, 2019, the energy price cap set a limit on a unit price of energy and a maximum standing charge. This meant energy suppliers had to charge consumers a price either at the level of or below the cap.

The new cap will come into effect on April 1, 2019, under which the default tariff price cap will increase by typically £117 annually across the UK and the pre-payment meter cap by £106.

Ofgem said rising wholesale costs were responsible for the majority of the increase (£74). It said the allowance for wholesale costs now makes up more than a third of the overall cap.