A £94 increase to the average annual household energy bill has come into effect after the regulator upped its price cap in response to a rise in global gas market prices.
The change, taking effect from 1 January, means average households are beginning 2024 with a 5% increase in energy bills – at the start of what could be the coldest three months of the year.
Every three months the energy regulator for Great Britain, Ofgem, sets a maximum price that suppliers can charge customers on standard variable tariffs for each unit of energy.
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The increase means that for the period 1 January to 31 March, the price cap is £1,928 a year for a typical household that uses gas and electricity and pays their bill by direct debit. That is up from £1,834 a year during the final three months of 2023.
However, the expectation is that prices will fall again when the cap next changes on 1 April.
Households that have not already done so are being urged to submit meter readings to their supplier as quickly as possible to ensure they are charged correctly.
The Ofgem chief executive, Jonathan Brearley, has acknowledged that many people are having “a difficult time” and that “any increase in bills will be worrying”.
It is the unit rates and standing charges that are capped, so the more energy a household consumes, the higher their bill. Where someone lives will also have an impact, as the cap on electricity prices differs slightly around the UK.
In the run-up to Christmas, Citizens Advice reported record numbers of people unable to pay their energy bills. It is one of the organisations that has called on the government to bring in additional targeted support for those struggling.
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Alastair Douglas, the chief executive of the website TotallyMoney, said energy companies had been instructed to contact struggling customers and offer support, “but that doesn’t mean you have to wait for them to reach out”. He said: “Get in touch at the earliest convenience and see if they can offer you a temporary debt repayment holiday, or a debt repayment plan to best suit your situation.”
In a glimmer of hope for households, the latest forecasts suggest energy bills could fall by 14% in April. The average annual electricity and gas bill should come down to £1,660 in April, the analytics firm Cornwall Insight has predicted.
The current increase has been blamed on rising costs in the international wholesale energy market because of market instability and global events, particularly Russia’s invasion of Ukraine and the conflict in the Middle East.
