Energy price cap to increase by 5% in January
The Office of Gas and Electricity Markets (Ofgem) have announced that at the beginning of 2024 the annual household energy bill will rise from £1,834 to £1,928.
Despite the winter months being associated with the ‘most wonderful time of the year’, Ofgem have announced today, 23rd November, that energy bills are going to be increasing by 5% as a result of higher wholesale costs by suppliers.
Within the announcement, which has come a day after Chancellor Jeremy Hunt unveiled his Autumn Statement, Ofgem have acknowledged that the rise in bills would be ‘worrying’ for many, but analysts have estimated that prices will drop in March.
Against this backdrop, Ofgem’s price cap affects more than 20 million households in England, Wales, and Scotland. The way that the cap works is the regulator sets the maximum amount that suppliers can charge for each unit of gas and electricity but not the total bill, therefore, if people exceed the amount provided, they will pay more.
Following today’s announcement, the price of gas will be set at 7p per kilowatt hour and electricity will be set at 29p.
Jonathan Brearley, chief executive of Ofgem, said: ‘It is important that customers are supported, and we have made clear to suppliers that we expect them to identify and offer help to those who are struggling with bills.’
Mr Brearley said: ‘People should weigh up all the information, seek independent advice from trusted sources and consider what is most important for them whether that’s the lowest price of a fixed deal.’
In addition, Dr Craig Lowrey, principal consultant at energy analysts Cornwall Insight, has explained that although now is a very unfortunate time for energy prices to rise, ‘now challenges’ have arisen in the market.
‘Amid the cost-of-living crisis, the last thing households need is a rise in energy bills – especially going into the winter months,’ Dr Lowrey said. ‘However, as is often the case in the energy market, new challenges have arisen, and our reliance on foreign energy has once again left the UK vulnerable to price increases caused by events around the globe.’
As a result of the price increase, it is expected that households on a pre-payment meter will be most affected – their typical annual bill is expected to rise to £1,960 in January. Individuals who pay every three months by cash and cheque pay should also expect a bill of more than £2,000 next year.
Image: Magnascan
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