In a matter of hours, UK energy regulator Ofgem will reveal plans to raise the price cap on household energy costs in January, resulting in an estimated 5% increase, bringing average prices to around £1,931 per year, although the prices could drop again by March. This period from January to March marks the time of highest energy usage for households due to colder temperatures and fewer daylight hours. A total of 29 million households across England, Scotland, and Wales are affected by the price cap, however, Northern Ireland holds separate rules.
Ofgem sets the maximum that energy suppliers can charge per unit of gas and electricity, and not the overall bill. Thus, a rise in usage results in higher bills for consumers. Presently, electricity charges are set at 27.35p per kWh, while gas stands at 6.89p per kWh. Last year’s Energy Price Guarantee from the government and additional household support of £400 over six months helped with bill increases, but this year no such equivalent scheme has been announced. Ergo, winter bill increases could be higher than last year’s, causing greater concern for households suffering from financial pressures.
With prices on the rise, consumers are increasingly defaulting on their energy bills. One such instance is Roy Bridgewood, from Manchester, who is £1,400 in debt on his gas and electricity costs, with his last gas payment using his savings. His financial struggles have worsened with two teenage children to take care of, and no prospect of work. Although suppliers must support consumers in difficulty with payment plans, costs for households on prepayment meters are anticipated to be the most affected by winter prices.
Ofgem’s announcement tomorrow will incorporate a cap on standing charges, the fixed daily costs involved with connecting households to the supply, an area of dispute for consumers who feel powerless to lower the charges. The amounts charged vary by location and have doubled more than twice in the past two years, culminating in most households paying 53p per day for electricity, and 30p per day for gas
Read the full article from The BBC here: Read More