Energy bills are expected to see a slight increase this upcoming winter season following the announcement of a new price cap by Ofgem. The average annual household energy bill is projected to rise by 0.2% starting in January, contrary to earlier forecasts of a decrease.
Households with average energy consumption levels that pay through direct debit can anticipate an annual bill increase from £1,755 to £1,758. For those using pre-payment meters, the price cap will rise from £1,707 to £1,711 annually, and for individuals paying upon receipt of the bill, the yearly charge will increase from £1,890 to £1,894.
Although the new price cap will be £37 or 2% lower compared to the previous period, energy bills are still notably higher than in the past. The price cap, which limits charges for gas and electricity unit rates as well as standing charges, will come into effect on January 1 and remain in place until March 31, subject to future adjustments by Ofgem.
The increase in the price cap is primarily attributed to government policy costs and operational expenditures, including contributions towards projects like Sizewell C nuclear and the Warm Home Discount scheme. Ofgem emphasized the importance of exploring different energy tariffs and payment methods to potentially reduce costs for consumers.
Minister for Energy Consumers Martin McCluskey highlighted ongoing efforts to address high energy bills, including initiatives like the expanded Warm Home Discount scheme. The price cap, which regulates unit rates and standing charges, undergoes periodic adjustments to reflect changing wholesale energy prices.
Cornwall Insight’s current forecast suggests a potential rise in energy bills by April due to increasing operational expenses related to maintaining the country’s energy networks. However, predictions are subject to change prior to the official announcement of the next price cap.