Energy bills are expected to see a slight increase this winter following the confirmation of a new price cap by Ofgem. The typical annual household energy bill is set to rise by 0.2% starting in January, contrary to earlier predictions of a decrease.
According to Ofgem, households with average energy consumption paying by direct debit will experience an increase from £1,755 annually to £1,758. For those using a pre-payment meter, the price cap will rise from £1,707 to £1,711 per year, and for individuals paying upon receipt of bill, the annual charge is going up from £1,890 to £1,894.
The new price cap, effective from January 1, will be £37 lower than the previous period this year, but bills will still remain higher than before. The increase is attributed to government policy costs and operational expenses, including support for projects like Sizewell C nuclear plant and the Warm Home Discount scheme.
Ofgem emphasized that while wholesale energy prices have stabilized recently, they remain subject to volatility. The regulator encouraged consumers to explore different tariffs and payment options to potentially reduce their energy costs.
Minister for Energy Consumers, Martin McCluskey, highlighted ongoing efforts to address high energy bills through initiatives like the Warm Home Discount scheme and investments in clean energy sources to lower costs in the long term.
The Ofgem price cap sets limits on unit rates for gas and electricity as well as standing charges, impacting the overall energy bills. The average unit rate for electricity is set to increase, while the average unit rate for gas will decrease. The price cap is reviewed every three months to reflect changes in wholesale energy prices.
Cornwall Insight, known for its accurate predictions, forecasts a further increase in energy bills in April due to rising operational expenses related to the energy networks. However, these predictions are subject to change before the official announcement of the next price cap.
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