Millions of Brits worried as energy bills set to rise by more than £100 from the new year
As Ofgem launches a price cap review, a forecast has warned of new year energy price hikes.
Tens of millions of Britons are expected to see their energy bills rise once more from the beginning of the new year.
According to forecasts from consultancy Cornwall Insight released today, Ofgem’s energy price cap announcement next week will set out a five per cent increase to 28.94p per unit of electricity and 7.42p per unit of gas.
In real terms under these changes, a typical household bill will rise from £1,834 per year to £1,931.
Cornwall’s outlook predicts that prices will sustain at this level from January through March, before falling to £1,853 at April’s outset. The price is forecast to not return to below today’s level until July.
This time next year, bills are expected to be around the rate of £1,863.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “An unstable wholesale energy market, coupled with the UK’s reliance on energy imports, makes it inevitable that energy bills will rise from current levels.
“This leaves households facing yet another winter with bills hundreds of pounds higher than pre-pandemic levels, and affordable fixed deals few and far between.”
He added: “The King’s Speech acknowledged that it is our exposure to volatile international energy markets that has led to higher and less predictable bills.
“While we continue to advocate for immediate targeted support for vulnerable consumers, it is evident that the only enduring solution lies in transitioning the UK away from the influence of global energy prices towards sustainable, domestically-sourced energy.”
According to the company, the high increase in electricity standing charges is primarily due to the ongoing reform of network charges, which has shifted more of the charges from per unit to per day.
All households pay the standing charge, meaning that customers will incur such costs regardless of their actual consumption, consequently affecting those who use less energy disproportionately.
Today, Ofgem released a review into its standing charges on energy bills, asking to hear views from consumers, charities and the energy sector, though the latter have remain divided on the topic.
Currently, properties pay a flat £300 to simply have an energy meter in their home.
Speaking on Twitter, Money Saving Expert founder, Martin Lewis said: “FINALLY ENERGY STANDING CHARGES TO BE REVIEWED. Thank you Ofgem for listening at last, I hope you will listen in the review too.
“Ninety per cent want standing charges lowered or scrapped, though we need to protect vulnerable high users with illness or disability.”
Back in August, Ofgem chief executive Jonathan Brearly urged ministers to consider the “broad and crude” price cap’s suitability.
