- Written by Kevin Beachy
- Cost of Living Reporter
Image source, Getty Images
A rise in the cost of domestic energy in England, Wales and Scotland has come into effect, putting further pressure on household budgets in the new year.
The higher price cap, set by regulator Ofgem, between now and April means gas and electricity costs will be 5% higher than in the last three months.
A household using a typical amount of gas and electricity will see their annual bill rise by £94.
But forecasts indicate that energy prices may fall sharply in the spring.
Activists said the relatively high cost of energy and other essential bills was putting severe pressure on budgets. January tends to be the busiest month for debt charities after Christmas spending, and this year is likely to be the same.
The government said it was supporting families with financial assistance such as cost-of-living payments.
Pay for what you use
Energy regulator Ofgem said the annual bill for a household using a typical amount of gas and electricity, which pays by direct debit, has now risen from £1,834 to £1,928.
However, if you use more, you will pay more because the price per unit of energy is quoted, not the total bill.
Specifically, in England, Wales and Scotland:
- Gas is now 7p per kilowatt hour, and electricity is 29p per kilowatt hour
- Households using prepaid meters saw their typical annual bill rise to £1,960
- Those who pay their bills quarterly with cash or checks now have a typical annual bill of £2,058.
- Standing charges – a fixed daily charge that covers the costs of connecting to a supply source – remained unchanged at 53p a day for electricity and 30p a day for gas. Although it varies by region
Prices and the sector are regulated differently in Northern Ireland. Households tend to pay less than the UK average, but businesses pay more.
Ofgem said the amount of energy debt and arrears faced by gas and electricity customers swelled to £2.9bn between July and September.
Fuel poverty charity National Energy Action is calling on ministers to introduce a repayment assistance scheme, as well as a reduced social tariff for those on benefits, and a home energy efficiency programme.
The recent rise in energy prices will affect about 29 million households. Of these, about four million people have prepaid meters, so they tend to pay for energy as they use it.
This means that some of the most vulnerable households using prepaid meters face particular pressure as prices rise in the coldest and darkest time of the year.
Winnie Baffoe says charities are stepping in to help their communities
Winnie Baffoe is Engagement Manager at the South London Mission, part of Bermondsey Central Hall Methodist Church, which provides charitable and council-funded support such as a warm center and food parcels.
She said many families were concerned about the cost of food, had limited means of cooking due to high energy costs, and were also concerned about heating bills.
“It’s devastating because it takes away their ability to be a family at home,” she said. “We have a beautiful big hall here and we find that the community uses it as a safe place to be, a place to meet other people, but also just a place to warm up.”
Last winter, overall energy prices were high, and the rises would have been even greater had it not been for the government’s energy price guarantee which caps a typical bill at £2,500.
But millions of households will pay more for energy this winter than last, even though prices were higher a year ago.
This is because families received a £400 rebate over six months last winter, but the government-funded support has not been repeated this time.
The government said it recognized the challenges faced by many people and was offering support including £150 Warm Home Discount And up to £900 in cost of living payments for those on means-tested benefits. Further support is still under review.
A Department for Energy Security spokesperson added: “We have invested more than £2bn in the Families Support Fund over the past two years – with almost £800m already paid out to families with children – and the current fund is available until March 2024.” .
Consultancy Cornwall Insight says the significant drop in wholesale prices faced by suppliers could see the annual bill for households using a typical amount of energy fall by £268 to £1,660.
However, this remains only a prediction, and international events can still have an impact on prices.
What can I do if I can’t afford my energy bill?
- Check your direct debit: Your monthly payment is based on your estimated energy usage for the year. Your supplier can reduce your bill if your actual usage is less than estimated.
- Pay what you can: If you can’t meet direct debits or quarterly payments, ask your supplier for a ‘able to pay plan’ based on what you can afford.
- Claim what you are entitled to: Make sure you claim all possible benefits. The Independent MoneyHelper The site has a useful guide.