Energy Price Cap Falls, but Households Could Still Pay 13% More This Winter
UK households may face an increase in energy costs this winter despite a recent reduction in Ofgem’s energy price cap. The cap, which came into effect this weekend, is expected to result in an average bill reduction from £2,074 to £1,923 for the three months from October 1 in England, Wales, and Scotland. However, this is still more than 50% higher than pre-crisis levels.
Concerns arise as the government has not announced any financial support similar to last year when the Energy Price Guarantee limited average bills to £2,500 per year. Additionally, households received an extra £400 over six months to offset soaring costs. These measures brought the average monthly cost of energy down to £141. Without similar support this year, average costs from October to December 2023 are expected to rise to £160.
It’s important to note that the energy price cap does not set an upper limit on actual bills, meaning households will pay more or less depending on their energy usage. Ofgem’s chief executive, Jonathan Brearley, mentioned that with energy prices easing, the regulator has allowed suppliers to earn a bit more from their customers. He emphasizes that suppliers should prioritize supporting their customers this winter and announces the introduction of a consumer code of conduct to be implemented by winter.
Despite the lower cap, experts argue that it remains significantly higher than pre-crisis levels and advocate for the introduction of a social tariff to offer cheaper gas and electricity to those in need. Without such measures, vulnerable households are projected to continue facing average energy bills of around £2,000 for years to come.
The Warm This Winter campaign highlights the concerns faced by households, stating that households across the country will experience increased energy standing charges, higher profits for energy firms, and growing debt to suppliers from October 1. They urge the government to implement the sensible recommendations outlined in the recent report by the House of Commons Energy Security Committee, emphasizing the need for immediate action to support vulnerable households.
Although some households plan to delay turning on their heating this year to save money, younger consumers appear less concerned about energy bills than older age groups. Notably, 38% of those aged 18 to 34 have already turned on their heating, compared to 24% of 35 to 55-year-olds and just 17% of over-55s.
For those looking to reduce energy costs, alternative cost-effective options are suggested, such as using portable heaters, hot water bottles, or electric blankets. Furthermore, it is advised to ensure boilers are serviced to avoid breakdowns during freezing temperatures.
It remains crucial for the government and energy suppliers to address the concerns raised by consumers and take appropriate measures to support households facing increasing energy costs. The call for a balanced approach that benefits those most in need remains a priority as the winter season approaches.
