family Energy bills It will rise on average by £94 from 1 January after Ofgem increased the price cap in response to rising wholesale prices.
The regulator’s maximum price rises by 5% from the current price of £1,834 for a typical dual-fuel household to £1,928 from Monday, driven almost entirely by rising costs in the international wholesale energy market due to market instability and world events – particularly conflict. in Ukraine.
Households are being urged to submit meter readings to their suppliers before January 1 to ensure they are charged correctly.
Ofgem chief executive Jonathan Brierley acknowledged that many people were currently facing a “difficult time” and that “any increase in bills would be worrying”.
But he said the rise was a result of the higher wholesale cost of gas and electricity, “which should be reflected in the price we all pay.”
Ofgem has made it clear to suppliers that it expects them to identify and provide assistance to those struggling with bills.
The increase comes into effect after the regulator revealed plans to lift the price cap from April to help suppliers recover nearly £3bn of debt owed by customers who cannot pay.
Ofgem is proposing to adjust the one-off price cap of £16 – the equivalent of around £1.33 a month – to be paid between April 2024 and March 2025, and wants energy companies to use the extra funding to support struggling customers and write off bad debts. .
What is the energy price ceiling?
The energy price cap sets a maximum amount that suppliers can charge households in England, Wales and Scotland for each unit of gas and electricity.
Energy in Northern Ireland is regulated separately.
The headline rate cap figure is an average across households and not the absolute maximum on bills, so those who use more will pay more.
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The announcement puts hopes of easing the cost of living crisis on hold, and comes after Chancellor Jeremy Hunt did not mention any additional help from the government to offset household energy bills.
Citizens Advice said it is helping record numbers of households struggling with energy debt and is seeing more people than ever before who cannot top up their prepaid meter.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “Struggling families are facing attack from all sides.
“Energy bills are rising as winter gets tough, Christmas debts need to be paid off, and the wider cost of living crisis drags on for another year.
“Ofgem needs to reverse the January price rise. The harsh impact of the change in billing at this time of year cannot be underestimated.
“Unaffordable energy prices are here to stay, and even in the winter of 2024/25, energy bills are expected to be 60% higher than in the winter of 2020/21.
“This means the UK government needs to take more action to help people stay warm this winter and every winter by increasing support for home insulation and cheap renewable energy.”
Warm This Winter spokeswoman Fiona Waters said: “Without additional support, this year will be nothing but a Happy New Year for people trapped in Britain’s broken energy system.”
However, in a glimmer of hope for households, the latest forecasts suggest that a typical household’s energy bills will fall to £1,660 from the start of April, reflecting the fall in global gas prices in recent weeks, and then to £1,590 from July before rising slightly to £1,640 from October next year.
Dr Craig Lowry, Principal Consultant at Cornwall Insight, said: “Current expectations for price cap declines later in the year may offer a small light at the end of the tunnel.
“Recent stabilization in international energy markets has moved into April price cap expectations, raising hopes that this downward trajectory will continue throughout the remainder of 2024.
“However, history has shown that the wholesale energy market is very volatile, and unexpected global events can cause energy prices to rise, ultimately increasing household bills – as we saw this time last year.
“Whether concerns grow in the Red Sea, or another potential supply disruption occurs, there are no guarantees that the price ceiling will not rise again.”
“To achieve significant reductions below pre-crisis levels, we must focus on long-term strategies that increase domestic renewable energy sources and reduce our dependence on volatile imports,” Dr. Lurie added.