Energy bills are expected to see a slight increase this winter following the confirmation of the new price cap by Ofgem. The typical annual energy bill for households is projected to rise by 0.2% starting in January, contrary to earlier predictions of a decrease.
Households with average energy consumption and paying by direct debit are estimated to witness an annual bill hike from £1,755 to £1,758. For those using pre-payment meters, the price cap is set to increase from £1,707 to £1,711 annually, while customers paying upon receipt of the bill will see a rise from £1,890 to £1,894 per year.
The new price cap, effective from January 1 to March 31, represents a 2% decrease or £37 lower compared to the previous period. However, despite this adjustment, energy bills remain significantly higher than in the past.
The price cap imposed by Ofgem restricts the maximum charges for gas and electricity unit rates and standing charges. It is important to note that the actual energy bill depends on individual consumption levels, and the price cap is reviewed every three months.
Factors contributing to the price cap increase include government policy costs and operational expenses such as funding the Sizewell C nuclear project and the Warm Home Discount scheme. Ofgem emphasized the importance of exploring different tariffs and payment methods to potentially reduce energy costs.
Minister for Energy Consumers, Martin McCluskey, highlighted ongoing efforts to address high energy bills, including initiatives like the Warm Home Discount scheme and investments in clean energy sources. Ofgem’s price cap adjustments aim to balance consumer protection with market dynamics influenced by wholesale energy prices and operational costs.
