Ofgem’s energy price cap is set to rise this winter with customers facing a £149 yearly increase on average, the energy regulator has revealed.
The cap has risen from £1,568 to £1,717 – an increase of 10 percent. It will come into effect for all households from October 1 and will remain at that level until the new year.
The added £12 a month on average won’t come as welcome news to bill payers who are already struggling to keep on top of other costs. Rampant inflation over the past two years has seen household expenditure reach record levels, as everything from groceries to rents and mortgages become more pricey.
Inflation in the UK went down to the Bank of England’s target of 2 percent in July for the first time in two years, although it did increase again in August to 2.2 percent. Against the backdrop of this positive economic news, many were hoping energy bills may follow suit.
That won’t be the case this winter as customers can expect to fork out more per unit, while naturally needing to use more to keep out the cold weather.
Ofgem’s energy price cap is not exactly what you will be charged for your usage, nor is it the maximum. Rather, it is the amount an average household can expect to pay for their energy. And with the winter months likely meaning most household will use more than average, many should expect increased costs exceeding 10 percent.
To track usage, it can be handy for some to know how much they are paying for one unit of energy (a KwH). After the new rise, the average unit charge for electricity will go up to 24.5p per KwH, up from 22.36p. For gas, the unit charge will be 6.24p per KwH, up from 5.48p.
Ofgem chief executive Jonathan Brearley said: “We know that this rise in the price cap is going to be extremely difficult for many households.
“Anyone who is struggling to pay their bill should make sure they have access to all the benefits they are entitled to, particularly pension credit, and contact their energy company for further help and support.”
Martin Lewis has also weighed in on the price cap rise to advise bill payers on how they can best navigate it. The money guru says people “can and should” save by switching their energy provider now. He points out a number of fixed-rate deals that will allow people to pay below the new cap level, but warns “they mightn’t be around long.”
Mr Lewis also says the government “must rethink” its decision to change the eligibility for Winter Fuel Payments to mean only pensioners claiming Pension Credit will receive it. The controversial move has been welcomed by some, but criticised by many fuel poverty and older age charities.