Households across Britain are facing increasing energy costs this winter after the regulator raised its price cap from October. Ofgem’s price cap is rising by £149 from the current £1,568 a year for a typical household in England, Scotland, and Wales to £1,717.
The energy price cap sets a maximum price that energy suppliers can charge consumers in England, Scotland, and Wales for each kilowatt-hour (kWh) of energy they use. The figures provided by Ofgem indicate what a household using gas and electricity, and paying by direct debit, can expect to pay if their energy consumption is typical. It does not limit a home’s total bills because people still pay for the amount of energy they use.
Ofgem has decided to increase the cap due to rising wholesale prices in the international energy market, caused by heightened geopolitical tensions and extreme weather events. Jonathan Brearley, Ofgem’s chief executive, highlighted that the prices of international gas, essential for heating homes and generating electricity, have increased, affecting consumer bills.
To lower energy bills, Ofgem advises consumers to shop around for better deals on energy tariffs. Considering fixing a tariff could provide savings and rate stability for a fixed period. Experts such as Martin Lewis recommend switching energy suppliers and exploring fixed-price energy tariff options for potential savings.
Additionally, Ofgem urges people to make use of state benefits they are entitled to that could help with energy bills and overall living costs. Individuals receiving pension credit qualify for the winter fuel payment, worth up to £300, to assist with energy bills. It is estimated that around 880,000 more households are eligible for pension credit support.
If individuals are struggling to pay their bills, they are encouraged to contact their energy supplier to discuss affordable payment plans. Energy companies are required to work with customers to agree on payment terms considering their income, debts, and circumstances. Richard Lane from debt charity StepChange emphasises the need for targeted support for households facing financial difficulties due to rising energy costs.
As energy prices continue to rise, it is essential for consumers to explore options, seek support, and consider energy-saving measures to manage their bills effectively. By staying informed and proactive, individuals can navigate the challenges of increasing energy costs and make informed decisions to lower their overall expenses.