Energy price cap: Gas and electric bills to rise as Ofgem brings announcement forward

·Business Reporter, Yahoo Finance UK
·3-min read
Experts expect the energy price cap on standard variable tariffs, which also affects fixed-rate tariffs, could rise from £1,277 to around £2,000 per year. Photo: Leon Neal/Getty Images
Experts expect the energy price cap on standard variable tariffs, which also affects fixed-rate tariffs, could rise from £1,277 to around £2,000 per year. Photo: Leon Neal/Getty Images

The new energy price cap will be announced as soon as 11am on Thursday, it has been revealed.

Tens of millions of households will be told how much their bills are set to rise from April after energy regulator Ofgem brought forward the announcement from 7 February to 3 February.

Experts expect the price cap on standard variable tariffs, which also affects fixed-rate tariffs, to rise from £1,277 to around £2,000 per year from 1 April. In the same week, National Insurance will rise from 12% to 13.25%, adding to the cost of living squeeze.

Energy costs are rising due to a global spike in demand for natural gas after economies restarted from the fallout of the coronavirus pandemic. More than 25 energy firms have collapsed since last summer.

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The move comes as the UK government is under pressure to provide support for around 22 million British households. Action has been delayed by the current chaos engulfing Downing Street over a number of parties during lockdown.

It has been reported that chancellor Rishi Sunak could reveal a scheme that will pay £200 rebates to families across the country.

According to the Times, ministers are poised to announce a multibillion-pound loan programme to energy suppliers across the country.

Taxpayers would underwrite loans to private energy firms, which would then pass on the money to every household in Britain in the form of a rebate, it said.

"The price cap raise will ring alarm bells for many households across the UK," Anita Dougall, chief executive at data expert Sagacity, said. "Families’ budgets are already stretched thinner than ever as the cost-of-living crisis escalates.

"National Energy Action warns this price hike could send a further two million people into fuel poverty this year, bringing the total to roughly 6 million – that’s 10% of the UK population.

"Energy is a human right, and all energy companies have tariffs in place to support vulnerable customers."

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The changes follow reports of just under 4 million people qualifying for Cold Weather Payments, while just over 1.3 million of these people are on Pension Credit.

Between 1 November and 28 January there were an estimated 13,000 Cold Weather Payments issued. These were all in Scotland which had six cold weather triggers over the Christmas period.

"Winter has yet to truly bite with only six Cold Weather Payment triggers so far this year, but this will come as little comfort to those worried about meeting surging energy costs," Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said. "Energy prices have been on the rise and look to go up still further when the new energy price cap increase is announced.

"Many people will have been banking on these payments to help them heat their homes over the coming months and could struggle to make ends meet without them.

"While we should be grateful that the weather has not been colder, we could still see people fall ill because they haven’t been able to adequately heat their homes as they are forced to make difficult decisions to deal with the rising cost of living."

Watch: What is inflation and why is it important?

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