Millions of households are being cautioned to prepare for increased winter energy costs. Cornwall Insight, an industry expert, predicts that the energy regulator Ofgem will raise its price cap to an average of £1,737 annually starting in October. This potential increase of £17 per year, equivalent to a 1% rise from the current cap level, contradicts earlier expectations of lower winter bills and is partly driven by the need to expand the Warm Home Discount for vulnerable households.
Despite the price cap dropping to £1,720 per year from July to September, covering a period of lower energy consumption in the summer, the upcoming cap revision is expected to hit harder as households typically ramp up heating usage during the colder months. Dr. Craig Lowrey from Cornwall Insight expressed concern over the unwelcome news of higher bills approaching as winter looms.
The projected £17 annual rise is estimated to collectively add over £350 million to energy bills, with individual costs varying based on factors such as energy usage and location. Cornwall Insight anticipates a slight reduction in the price cap in January, subject to factors like geopolitical shifts, weather patterns, and policy changes affecting energy costs.
The expected October price hike reflects upcoming adjustments by Ofgem, including the extension of the Warm Home Discount scheme for vulnerable households, providing additional support to millions of people. Households affected by Ofgem’s price cap, particularly those on standard variable tariffs, are advised to take action by exploring more cost-effective fixed-price deals.
Scott Byrom, CEO of The Energy Shop, emphasized the significance of energy consumption during the colder months, highlighting the potential savings from switching to better-priced energy deals. Richard Neudegg of Uswitch.com stressed the importance for consumers to prepare for increased winter costs by considering fixed-rate deals to mitigate the impact of rising energy prices.
The escalation in energy bills coincides with other rising expenses, such as grocery and water bills, posing challenges to household budgets and potentially contributing to higher inflation rates. As winter approaches, households are encouraged to proactively manage their energy costs by exploring alternative tariffs and switching to more affordable energy plans.
Simon Francis of the End Fuel Poverty Coalition highlighted the ongoing challenges faced by families dealing with escalating energy costs, underlining the need to transition to cleaner, more affordable energy sources. A representative from the Department for Energy Security & Net Zero reiterated the government’s commitment to clean energy initiatives as a long-term solution to reducing energy expenses and supporting households during the winter season.