In what’s being seen as another financial hit for many, energy bills are expected to surge once more in the upcoming spring. The Ofgem energy price cap dictates the peak rates for gas and electricity unit prices, including standing charges.
For an average household on direct debit payments, there’s a hike from £1,717 to £1,738 annually starting from tomorrow (January 1). Yet, experts foresee another rise by April.
Updated quarterly, the Ofgem cap is tipped by Cornwall Insight to increase further to £1,783 – almost a 3% jump. Despite reaching highs over £4,000 during winter 2023, households benefited from the temporary Energy Price Guarantee, which kept energy bills at bay with a £2,500 cap.
READ MORE: Royal Mail warns seven postcodes in England face delivery delays
Get breaking news on BirminghamLive WhatsApp, click the link to join
Dr Craig Lowrey, a principal consultant at Cornwall Insight, reflected: “The news of a rise in our forecast will be disappointing to households’ who will no doubt have been hoping for relief from recent cap rises. However, the turbulence in wholesale markets – a level of volatility we haven’t seen for months – reminds us to remain cautious of predictions, which could very well increase or decrease several times before the April cap is set.”
“With a Trump presidency on the horizon, and an uncertain geopolitical situation in the Ukraine and the Middle East, wholesale market volatility looks set to remain. To add to the wholesale turbulence, other cost measures being decided upon by Ofgem and the government have the potential to move the cap up or down. As we look ahead, consumers must brace for continued fluctuations.”, reports the Mirror.
“Ultimately, the security of energy supply, and Ofgem’s evolving policies will shape the trajectory of bills as we move into 2025 and beyond. It’s crucial for policymakers and industry stakeholders to work together to ensure fair and sustainable energy pricing for households.”
Despite its name, the price cap doesn’t actually limit how much you can pay for energy. The Ofgem price cap sets the maximum unit price you can be charged for gas and electricity, as well as the maximum daily standing charge, which is a fixed fee that you pay to be connected to the grid.
You are covered by the price cap if you’re on a standard variable rate (SVR) tariff – sometimes called a default or variable tariff. These are normally people who are not locked into a fixed deal, or those who didn’t switch to a new tariff when their previous fix expired.
There are 26 million people who are on the price cap.