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UK Energy Price Cap Falls But Millions Set For Higher Bills - 25/08/2023

The cap, which limits how much gas and energy providers can charge you, has been set at £1,923 and will take effect from 1 October. It was first introduced on 1 January 2019, with the aim of preventing households on variable tariffs from being ripped off. At the time, it was reviewed twice a year - but this has since increased to four times a year with assessments carried out in January, April, July and October. The price cap was mainly based on average energy wholesale prices in the months prior, which still plays a part in how the cap is calculated now. As a result, the average price of the cap based on typical use has fluctuated quite a bit since 2019. Here's how prices have changed over time: 2023 spring (until 30 June): £3,280 2023 winter (until 31 March): £4,279 2022 autumn (until 31 December):£3,549 2022 summer: £1,971 2021/2022 winter: £1,277 2021 summer: £1,138 2020/2021 winter: £1,042 2020 summer: £1,126 2019/2020 winter: £1,143 2019 summer: £1,217 It's worth noting that between October 2022 and June 2023, no one paid the full amount under the price cap, as prices were discounted under the government's Energy Price Guarantee. The scheme limited annual energy costs to £2,500 for the average household - subsidising Ofgem's price cap. That support provided people with £400 over six monthly instalments.

Still, as many as 7.2 million households in England could face higher energy bills this winter, with some paying £100 more, the Resolution Foundation said in a study this week. Ofgem is also increasing standing charges for pre-payment meters, to cover the cost of supply connections. The meters are often installed in lower income or vulnerable households. The regulator is changing the way the earnings allowance for suppliers is calculated and that will add about £10 to each household bill, Ofgem said.

Britain remains in the midst of an historic cost-of-living crisis, with consumers having to pay more for everything from food to fuel housing costs. While inflation has eased from the highest level in decades, it’s still stubbornly elevated. The Bank of England’s chief economist recently warned that rising energy costs could derail efforts to keep overall prices in check.

Sources: Skynews and Yahoo finance

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