Yahoo News New warning on energy bills as UK households face further price cap rise
UK householders are being warned that energy bills are set to go up again after Christmas. Analysts say the Ofgem price cap is expected to rise from January 1, dashing hopes of the cut that had previously been forecast.
Cornwall Insight said it expects Ofgem to reveal this Friday that the typical household's dual-fuel energy bill will rise by 1 per cent, or £19, from £1,717 to £1,736 from the start of 2025. It previously predicted a 1 per cent fall to £1,697 but said this was no longer likely to be the case and gas and electricity tariffs are now set to increase.
Millions of pensioners are also facing a winter with less support, after the new Government decided to scrap the Winter Fuel Payment for those who do not receive Pension Credit or other benefits. About 10 million pensioners will miss out on the allowance of up to £300 this year but the DWP is urging councils to step up and offer Household Support Fund cash to those who just miss out on Pension Credit.
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Cornwall Insight said: "Given the price cap rise in October, many will have been hoping to see a fall in the cap for January. Unfortunately, forecasts show that prices will be staying relatively high for the remainder of winter."
However, there may be good news further ahead as prices are still expected to fall slightly in both the second and fourth quarters of next year, according to the consultancy.
Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets, with the regulator set to confirm the level for the first quarter of next year on November 22. The cap, introduced by the Government in January 2019, sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales for each kilowatt hour (kWh) of energy they use.
While the cap is significantly lower than at the peak of the energy crisis, which was fuelled by Russia’s invasion of Ukraine in February 2022, prices are still "very sensitive to global events" and supply issues tied to geopolitical tensions.
Craig Lowrey, principal consultant at Cornwall Insight, said: "Supply concerns have kept the market as volatile as earlier in the year and additional charges have remained relatively stable, so prices have stayed flat. While we may have seen this coming, the news that prices will not drop from the rises in the autumn will still be disappointing to many as we move into the colder months."
He called for the Government to help protect the vulnerable and tackle energy supply for the long-term. Mr Lowry said: "With it being widely accepted that high prices are here to stay, we need to see action. Options like social tariffs, adjustments to price caps, benefit restructuring or other targeted support for vulnerable households must be seriously considered."
He added: "The Government needs to keep momentum on the transition while acknowledging that immediate support is essential for those struggling now. Inaction is a choice to leave people in the cold."
Ofgem is also currently considering the future of price protection, including the suitability of the price cap and a potential permanent ban on so-called acquisition tariffs – cheaper prices for new customers to lure them away from their existing supplier.
National Energy Action director of policy and advocacy Peter Smith said: "The current cold spell is already having a devastating impact on the most vulnerable people. With unaffordable energy bills and far less support available nationally this winter, millions of people are already rationing their energy use to dangerous levels or getting deeper into debt trying to keep warm.
"With increased wholesale prices in the last few months, it is no surprise that there will be no let-up in the unaffordable cost of energy. The most vulnerable people will sink into further difficulties and acute hardship."
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