Energy bills to rocket to £3,549 a year as price cap hike confirmed | The Sun
ENERGY bills are set to rocket to £3,549 on average per year, piling further misery onto households.
The energy regulator confirmed the new price cap, which comes into effect on October 1, this morning.
The rise will hit 24million households, with four million of those on prepayment meters.
Over nine million more households have moved on to the standard variable tariff since October last year after more than thirty energy suppliers went bust.
Those who pay their energy bills by direct debit will see their bills increase by 80% from £1,971 to £3,549.
Those on credit meters who pay by other means will see their bills hiked from £2,100 to £3,764.
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Meanwhile those on prepayment meters will see their bills increase by £1,591 as the price cap for these customers moved from £2,017 a year to £3,608 a year
High energy bills are contributing to a rapid rise in inflation and the Bank of England warned earlier this month that households should prepare for a 15-month recession as inflation hit its highest level in 42 years.
The cost of living has risen substantially in recent months and the hike comes in the same week that the investment bank, Citi, warned that rising wholesale gas prices could push inflation to a 46-year high of 18.6% in January.
The bleak winter ahead will leave many Brits asking if it's justifiable that energy bosses are taking home a staggering £15million, while hard-up households face choosing between heating and eating.
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Jonathan Brearley, chief executive officer of Ofgem, said: "We know the massive impact this price cap increase will have on households across Britain and the difficult decisions consumers will now have to make. I talk to customers regularly and I know that today’s news will be very worrying for many.
"The price of energy has reached record levels driven by an aggressive economic act by the Russian state. They have slowly and deliberately turned off the gas supplies to Europe causing harm to our households, businesses and wider economy. Ofgem has no choice but to reflect these cost increases in the price cap.
"The Government support package is delivering help right now, but it’s clear the new Prime Minister will need to act further to tackle the impact of the price rises that are coming in October and next year."
Chancellor, Nadhim Zahawi said: "I know the energy price cap announcement this morning will cause stress and anxiety for many people, but help is coming with £400 off energy bills for all, the second instalment of a £650 payment for vulnerable households, and £300 for all pensioners."
On the same day that the new price cap comes into force, households across the country will start to receive a £400 energy bill discount from their suppliers.
It means that bills will be reduced by £66 each month, for six months.
However, consumer group, Which? recently called on the government to boost this discount to £1,000.
The price cap is expected to go up again in three months time and energy experts at Cornwall Insight predict bills could hit £4,649 in January and £5,341 from April.
Soaring wholesale gas costs due to supply issues and the war in Ukraine mean energy firms are passing on high prices to customers.
The energy price cap, set by the regulator Ofgem, limits the maximum suppliers can charge customers for each unit of gas and electricity on the standard variable tariff.
Right now, the current rates for duel fuel tariffs are:
- 7p per killowatt hour (p/kWh) for gas
- 28p/kWh for electricity
- A standing charge of 27p per day for gas
- A standing charge of 45p per day for electricity
From October the first the new rates will be:
- 15p per killowatt hour (p/kWh) for gas
- 52p/kWh for electricity
- A standing charge of 28p per day for gas
- A standing charge of 46p per day for electricity
The price cap does not protect customers from wholesale prices.
This means it's not a cap on how much you can be charged for the energy that you use.
So if you use more energy than the typical households you should expect to pay more.
If you use less energy than the typical household you could pay less than the price cap.
If you're on a fixed deal then you don't need to do anything right now and you won't see a rise in your bill until your deal ends.
If you fixed rate is up you'd be better off letting your contract roll-over onto the standard variable tariff as there are no fixed energy deals meaningfully cheaper than the price cap right now.
Can I get help from my energy supplier?
Yes, energy suppliers do offer support for those who are struggling to pay their bills.
There are plenty of energy grants and schemes open to help you out if you're struggling.
British Gas has recently confirmed that it'll pay its most vulnerable customers grants worth £750 to help with sky-high bills.
Ask your supplier what's on offer and how to apply, or check here:
- British Gas Energy Trust
- Bulb energy fund
- EDF's energy customer support fund
- E.on's energy fund
- Npower's energy fund
- Ovo's debt and energy assistance
- Scottish Power's hardship fund
There's also a one-off fuel voucher from your energy supplier if you're on a prepayment metre.
If you're in debt there are plenty of services you can take advantage of and they offer free and friendly advice on how to manage debt.
Most of them can offer you free guidance and help in person, over the telephone or online.
- Money Advice Service – 0800 138 7777
- Citizens Advice – 0808 800 9060
- StepChange – 0800 138 1111
- National Debtline – 0808 808 4000
They can also help you take the next steps if you need a debt management plan (DMP) to tackle your debt or an Individual Voluntary Arrangement (IVA). These are agreements for managing multiple debts.
What help is already available?
From September the second, one million people receiving tax credits will receive the first half of the £650 cost of living payment.
The money will be paid in the same way you usually get your tax credits.
And from September 20, over six million people with disabilities are set to receive £150 to help with the rising cost of living.
From October the first, all UK households are set to receive the £400 energy bills rebate.
The payment will be made up of six discounts between October and March next year.
Households will receive a £66 energy bill discount in October and November and a discount worth £67 in December, January, February and March.
We've listed how the leading energy suppliers plan to pay households the discount and are waiting on others to respond.
The way you'll be paid will depend on how you pay for your energy.
If you're on a credit meter the discount will come off your bills, but if you're on a prepayment meter you'll get a voucher.
Check with your supplier to confirm how you'll receive the cash.
In November, a £300 one-off "Pensioner Cost of Living Payment" will be paid out to eight million households.
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It will be given to those who already get the winter fuel payment – which is worth between £100 and £300 for those over state pension age.
Payments for the £150 Warm Home Discount scheme will likely begin from December.
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