Millions of households are bracing for a hike in energy bills this winter following Ofgem’s latest price cap announcement. From October, the cap will surge by 2% – a figure higher than the anticipated 1% increase – leading to increased bills for millions of families across England, Scotland and Wales.
For an average dual-fuel household paying via direct debit, the typical annual bill is set to rise from £1,720 to £1,755. Prepayment customers will witness their bills jump from £1,672 to £1,707, while those who pay upon receipt of their bill will see an increase from £1,855 to £1,890.
Are rising energy bills a worry for you this winter? Should the price cap be held down to protect households? Have your say in our comments section.
Ofgem emphasised that the cap does not represent an absolute limit on bills but rather a restriction on unit rates and standing charges. The cap undergoes review every three months, implying prices could fluctuate again come January.
Standing charges, which are paid daily irrespective of usage, are also on the rise. For electricity, the standing charge will escalate from 51.37p to 53.68p a day, while for gas it will increase from 29.82p to 34.03p.
The unit rate for electricity will slightly rise from 25.73p to 26.35p per kWh, whereas the gas unit rate will marginally drop from 6.33p to 6.29p.
Ofgem attributed the larger-than-anticipated increase partly to elevated network costs and the expansion of the Warm Home Discount scheme, which offers eligible households a £150 reduction on their winter bills.
Tim Jarvis, Ofgem’s director general for markets, has advised: “While today’s change is below inflation, we know customers might not be feeling it in their pockets. There are things you can do though – consider a fixed tariff as this could save more than £200 against the new cap. Paying by direct debit or smart pay as you go could also save you money.”
He further explained that energy prices are still vulnerable to international gas markets: “That’s why we continue to work with government and the sector to diversify our energy mix to reduce reliance on markets we do not control.”
Energy minister Michael Shanks highlighted that families were still bearing the brunt of fluctuating fossil fuel costs: “Wholesale gas prices remain 75% above their levels before Russia invaded Ukraine. That is the fossil fuel penalty being paid by families, businesses and our economy. The only answer for Britain is to get off the rollercoaster of fossil fuel prices and onto clean, homegrown power.”
The cap covers around 34 million people, including 20 million paying by direct debit, 8 million on prepayment meters, and 6 million who pay on receipt of bills. However, Ofgem estimates around 20 million households are on fixed tariffs – some of which could save more than £200 compared to the new cap level.
Cornwall Insight, an energy consultancy firm, forecasts that the cap will likely drop again in January to approximately £1,712 for a typical household paying by direct debit. However, this is subject to various factors such as global energy prices, weather conditions, and government policy.
Are rising energy bills a worry for you this winter? Should the price cap be held down to protect households? Have your say in our comments section.
