Not just the big six: The challenger energy firms who've also raised prices

Within days of the Ofgem announcement of the price cap increase, all six of the UK's biggest energy firms announced price rises in line with the new level.

While it's easy to point fingers at the biggest energy firms, it's not only these utility giants who are putting their prices up. Numerous smaller energy companies have also raised their prices, although they tend to get less bad press leaving many customers unaware.

The latest company to announce a price rise is First Utility. Their tariff increase is by the same amount as the Ofgem price cap increase: £117 a year.

The increase by First Utility is expected to affect more than 154,000 customers. Speaking about the decision to raise prices, First Utility have claimed it is due to 'the rising costs of energy, including wholesale and policy costs'.

Other small suppliers who have hiked their prices in response to the price cap include Bristol Energy, OVO Energy, Tonik Energy and Toto Energy. Only two suppliers, Igloo Energy and Bulb have actually lowered prices since the announcement was made.

Price cap problems

Ofgem originally introduced the price cap to protect the estimated 11 million households who are not on a fixed price deal with their suppliers. These customers are on their suppliers default tariff, also known as a standard variable tariff (SVT), traditionally the most expensive way to buy energy.

At the outset, the price cap was expected to save customers on SVTs an average of £76 a year. However, last month Ofgem announced the cap level would rise by around 10%. However, they have insisted that this is a 'fair price' which reflects the cost of supplying energy and not supplier profiteering.

Despite a rise in the cap level, firms are still struggling to maintain profitability since the introduction of the cap.

British Gas owner, Centrica, have claimed that the price cap will have a negative effect on their profits. They are estimating a £300m reduction over the course of the year.

The merger between npower and SSE was abandoned, partly due to the introduction of the cap, and subsequently npower announced it would be cutting 900 jobs to save costs.

Suppliers continue to fail

The stresses of the current climate within the energy industry continue to bring casualties in the small supplier market. Just this week, Brilliant Energy have become the latest company to fold, with Our Power and Economy Energy also having collapsed since the new year.

SSE, one of the big six providers, have of accused small firms of deliberately under-pricing their tariffs in order to appear at the top of comparison tables, calling the practice 'irresponsible'. At the end of last year, failed energy firms were thought to be costing bill payers around £80m, and it appears we haven't seen the last failure yet.

Although Ofgem's new supplier licensing tests aim to ensure better financial health of new entrants to the UK market, this won't help existing firms who are struggling to remain profitable.

Price rises are never a welcome prospect, but it seems they are inevitable if suppliers are going to survive.

People facing increasing energy bills can look for a better deal here or read more about the cheapest energy deals here.