Millions of households in the UK will experience a slight increase in their energy prices as Ofgem, the regulator, has announced an increase in its price cap. The cap will see a 0.2% rise starting in January, affecting households on variable tariffs in England, Wales, and Scotland. This change comes as a surprise to many, as forecasters had anticipated a potential decrease in the cap.
The rise in the price cap is attributed to several factors, including government policies and rising costs related to operating energy networks. Tim Jarvis from Ofgem noted that while wholesale energy costs are stabilizing, they contribute significantly to consumers’ overall bills. For those using more electricity, the impact of rising unit rates will be more pronounced.
While the new cap is slightly lower than the previous year’s rates, individuals are encouraged to explore options for reducing their bills, such as switching to fixed tariffs. The cap determines the maximum price per unit of gas and electricity rather than the total amount billed, meaning actual costs will depend on energy usage.
Current data show that households collectively owe a record £4.4 billion in energy debt. In response to this, Ofgem is considering measures to facilitate relief, potentially managing to write off some unpaid bills early next year. Energy UK’s chief executive emphasized that individuals facing difficulties should proactively engage with their energy suppliers.
The government has suggested additional support measures to alleviate the cost of living, with one proposal being the potential removal of VAT on energy bills. Discussions are ongoing about the longer-term strategy for energy pricing and support, particularly in light of the increasing pressures from both operational costs and environmental targets.
Source: https://www.bbc.com/news/articles/c2lplg7d9ewo?at_medium=RSS&at_campaign=rss