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Millions of households in England, Wales, and Scotland are set to experience a modest increase in energy prices this winter, as Ofgem has announced the upcoming price cap adjustment. Starting in January, the cap on energy prices will rise by 0.2% for those on variable tariffs, despite prior predictions that prices might fall at the beginning of the year. This unexpected change is mainly attributed to government policy influences rather than shifts in wholesale energy costs.
Although wholesale energy prices have stabilized somewhat, they continue to account for the largest part of customers’ bills, making them vulnerable to fluctuations, according to Tim Jarvis from Ofgem. The adjustment reflects a rise in electricity unit rates balanced by a minor decrease in gas prices, meaning households with higher electricity consumption will be more affected. While prices will remain slightly lower than at the same time last year, Jarvis emphasized the price cap serves as a baseline and encouraged consumers to consider alternatives like fixed tariffs to manage their expenses better. Ofgem also noted that government policy costs and operational expenses, such as funding the Sizewell C nuclear project, are driving this price cap revision.
The price cap regulates the maximum cost per unit of gas and electricity, not the overall bill, so individuals using more energy will naturally pay more. Ofgem’s illustrative example assumes an average household consuming 11,500 kWh of gas and 2,700 kWh of electricity annually on a dual-fuel tariff with direct debit payments. For this typical usage, the yearly bill is expected to increase by £3, from £1,755 to £1,758. Standing charges, which cover fixed network and government levy costs, will also rise by 2% for electricity and 3% for gas. Dame Clare Moriarty of Citizens Advice highlighted ongoing concerns, stating: “With bills still drastically higher than before the energy crisis, and due to rise again from April, it’s high time for decisions about the longer term.”
Local community initiatives are adapting to help residents cope with energy costs as colder weather arrives. At St Nicholas Church in Maidstone, Kent, Liz Walker, who coordinates a morning cafe, explained they have been opening earlier in recent years to provide a warm space, helping people avoid keeping their home heating on during the morning. Meanwhile, charities report rising energy debts, which have now reached a record £4.4 billion. Ofgem intends to implement measures to write off up to £500 million of this debt early next year. Dhara Vyas, Chief Executive of Energy UK, urged those struggling to pay their bills to contact their energy suppliers promptly, emphasizing that help is available, including efficient appliances, personalized tariffs, and benefit checks. Energy consultancy Cornwall Insight noted that future bills could rise further due to government policy costs linked to network management and the transition to net zero, even as fossil fuel price volatility reduces. The government has hinted at additional support, such as potentially removing VAT from energy bills, which could save households around £80 annually. However, experts caution this would only shift costs elsewhere rather than eliminate them.
The political debate continues around energy costs, with the government expanding the Warm Home Discount scheme to support families this winter, while opposition parties criticize net zero policies for driving up prices despite falling gas costs. Shadow energy secretary Claire Coutinho stated: “Despite gas prices falling, independent experts, energy suppliers, and academics say it’s the extra costs of Ed’s Net Zero targets that are putting upward pressure on bills.” As temperatures drop, advice persists on how to stay warm affordably—focusing on measures like wearing warmer clothing, improving insulation, and heating only the rooms in use rather than entire homes
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