November 23, 2023, 07:15 | Updated: November 23, 2023, 08:18
Millions of households are expected to see their utility bills skyrocket starting in January as a result of the price cap hike.
The average household energy bill is set to rise by £94 a year from January after Ofgem raised the price cap in response to rising wholesale prices.
Market volatility and global events, particularly the conflict in Ukraine, were also to blame, the regulator said.
The price cap will be reduced from the current £1,834 for a typical dual-fuel home to £1,928 from January 1.
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Chief executive Jonathan Brearley said: “These are difficult times for many people and any increase in bills will be concerning.”
“However, this rise, around the levels we saw in August, is the result of higher wholesale costs for gas and electricity, and this needs to be reflected in the prices we all pay.
“It is important that our customers are supported and we have made it clear to our suppliers that we expect them to identify and provide support to those who are struggling with their bills.
“We are also seeing choice returning to the market, which is a positive sign, with customers now benefiting from shopping around with the range of tariffs available, offering the security of a fixed fee and , which may offer more flexible trading that tracks below the price’ cap.
“People should weigh all the information, seek independent advice from trusted sources and consider what is most important to them: the best price or the security of a fixed contract.”
Energy price caps set limits on the maximum amount that suppliers can charge households in England, Wales and Scotland per unit of gas and electricity.
The key price cap figure is an average across households, rather than an absolute ceiling on how much you can bill, so those who use more will end up paying more.
The announcement follows Prime Minister Jeremy Hunt’s statement in the autumn, in which he made no mention of further support from the government to help offset households’ energy bills.
Gillian Cooper, director of energy at Citizens Advice, said: “Rising prices during the coldest months of the year will make life even harder for millions of people who are already struggling to pay their bills. I guess so,” he said.
“We already have record energy debt and more people than ever can’t afford to refill their prepaid meters.
“Yesterday, the Government missed an opportunity to announce additional support for households who desperately need it this winter.
“Without action, too many families will be forced to choose between heating and eating this winter.
“We urgently need the government to keep its promise to consider options to provide targeted financial support in energy tariffs from April 2024.”