Energy bills: Ofgem confirms price cap rise as household costs to hit £3,000 | Personal Finance | Finance

0

The cost of living crisis is showing no signs of slowing down as energy bills are predicted to remain high despite significant support from the Government and suppliers.  For the first three months of next year, Ofgem has confirmed that the energy price cap will rise to an yearly level of £4,279 for an average dual fuel household. This is based on households paying by direct debit based on typical consumption, however families will still be protected by the Government’s energy price guarantee until the end of March 2024.

As a result, there is “no immediate action” which needs to be taken following today’s price cap announcement, according to Ofgem.

Recent forecasts from Cornwall Insight suggest that the energy price cap will increase to £3,740 a year for a typical household from April.

On top of this, the analytics firm believes the price cap will continue to be higher than £3,000 annually until at least the end of 2023.

What is the energy price cap?

The price cap is set by the country’s energy regulator Ofgem and limits the maximum amount suppliers can charge households for each unit of energy they use. It applies to those living in England, Scotland and Wales.

READ MORE: Britons urged to consider ‘simple’ boiler hack that could cut energy bills by £112 a year

On October 1, the energy price cap rose once again with experts estimating that average bills could have hit £3,500, based on typical use, without the announcement of further cost of living support to mitigate the damage.

Following the introduction of the energy price guarantee, households saw their energy bills rise by around 27 percent from October 2022 instead of the previously expected 80 percent increase.

With external factors putting pressure on the wholesale gas and electricity market, as well as the invasion of Ukraine by Russia, the energy price cap is expected to remain high for the foreseeable future.

What is the energy price guarantee?

Announced under Liz Truss’ premiership, the typical price of a unit of gas and electricity is capped which means the average household will pay £2,500 a year for energy bills, based on typical use, under this Government scheme.

DON’T MISS

However, the energy price guarantee does not mean all bills will be capped at £2,500. Instead, only families with average usage will experience the cap while those with above average usage will have to pay what they owe.

From October, standing charges increased from 45p a day to 46p a day for electricity and 27p to 28p for gas. Furthermore, families with average usage will pay 10.3p per kWh for gas instead of the previous maximum of 7p.

Originally created to last for two years, Chancellor Jeremy Hunt has announced it would end in April 2023. However, Mr Hunt confirmed the existing price guarantee will rise to £3,000 from April next year, for 12 months.

Gillian Cooper, head of energy policy for Citizens Advice, highlighted why households should not be concerned with today’s price cap rise in light of the Government’s price guarantee.

READ MORE: Britons urged to consider ‘simple’ boiler hack that could cut energy bills by £112 a year

FOLLOW US ON GOOGLE NEWS

 

Read original article here

Denial of responsibility! Samachar Central is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment