Energy bills are expected to increase slightly this winter 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 previous predictions of a decrease.
According to Ofgem, households with average energy consumption using direct debit payments will see their yearly bill climb from £1,755 to £1,758. For those paying through a pre-payment meter, the price cap is set to increase from £1,707 to £1,711 annually, and for those paying upon receipt of the bill, it will rise from £1,890 to £1,894.
While the new price cap will be £37 lower compared to the previous period earlier this year, actual bills are still significantly higher than in the past. Ofgem mentioned that wholesale prices have been stable, decreasing by 4% over the last three months, but warned of ongoing volatility in the market.
The price cap adjustment is attributed to government policy costs and operational expenses, including contributions towards projects like Sizewell C nuclear plant and the Warm Home Discount scheme. Ofgem emphasized the importance of exploring different tariffs and payment methods to potentially reduce energy costs for consumers.
The new price cap, effective from January 1 until March 31, will be reviewed and revised by Ofgem periodically. It is designed to limit the maximum charges for gas and electricity unit rates, as well as standing charges. The cap is subject to adjustments based on changing wholesale energy prices and regional variations.
Minister for Energy Consumers, Martin McCluskey, emphasized 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 aims to provide a safeguard against excessive energy charges while encouraging consumers to explore cost-saving options.
Cornwall Insight predicts a potential increase in energy bills in the upcoming months due to escalating network maintenance costs. However, this forecast is subject to change pending further developments in the energy market.