Energy bills will rise again: Ofgem is set to increase typical household’s bill to £1,931 next week – and it won’t fall below today’s prices until July
- Price cap will be increased to 28.94p per unit of electricity and 7.42p for gas
- Forecasts show that the typical bill from the start of April, but not to today’s level
- Last year’s energy costs saw many consumers carefully managing their usage
Millions of families will see their energy bills rise again from the beginning of January, a new forecast has warned.
Industry regulator Ofgem is expected to announce next Thursday that the energy price cap will be increased to 28.94p per unit of electricity and 7.42p per unit of gas from the start of next year.
It means that the typical household’s bill will rise from £1,834 per year to £1,931, an increase of 5%, according to experts at consultancy Cornwall Insight.
The forecasts show that the typical bill will then fall to £1,853 from the start of April, but not reduce to below today’s level until July next year.
The cap is projected to decline from the end of March 2024, although this remains subject to the ongoing volatility in the wholesale energy markets. However, it will continue to remain well above historic levels.
The forecasts show that the typical bill will then fall to £1,853 from the start of April, but not reduce to below today’s level until July next year
It means that the typical household’s bill will rise from £1,834 per year to £1,931, an increase of 5%, according to experts at consultancy Cornwall Insight
Energy prices soared after Russia’s invasion of Ukraine in February 2022, leading the government to introduce a guarantee that typical household’s annual gas and electricity bill stayed below £2,500, despite Ofgem’s cap increasing above this level.
The Energy Price Guarantee finished in June 2023, and the Ofgem cap once again determines how much customers can be charged.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: ‘An unstable wholesale energy market, coupled with the UK’s reliance on energy imports, makes it inevitable that energy bills will rise from current levels.
READ MORE: Ofgem considers alternatives to energy standing charges as bills are predicted to keep rising until the middle of 2024
‘This leaves households facing yet another winter with bills hundreds of pounds higher than pre-pandemic levels, and affordable fixed deals few and far between.
‘The King’s Speech acknowledged that it is our exposure to volatile international energy markets that has led to higher and less predictable bills.
‘While we continue to advocate for immediate targeted support for vulnerable consumers, it is evident that the only enduring solution lies in transitioning the UK away from the influence of global energy prices towards sustainable, domestically-sourced energy.’
Cornwall said recent milder weather is helping to bring down gas prices, and this could help reduce bills next year if it continues, but ‘sharp price falls are not expected’, given the number of variables which will weigh on the market over the next few months
The consultants also warned that their forecasts imply that the standing charge will rise by 8p per day from the start of April.
All households have to pay the standing change, meaning that any increases disproportionately affect those who use less energy.
Last year’s energy prices saw many consumers carefully managing their usage, with four out of every five having turned down their thermostats, according to analysis by Tado.
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