Millions of households are being cautioned to prepare for increased winter energy bills, with industry experts at Cornwall Insight predicting that the energy regulator Ofgem will raise its price cap to an average of £1,737 per year starting in October. This potential increase of £17 annually, representing a 1% rise from the current cap level, contradicts earlier expectations of lower bills for the upcoming winter season.
The projected surge in prices is partly attributed to the expansion of the Warm Home Discount for vulnerable households. Ofgem periodically reviews its price cap, and the upcoming adjustment, set to be confirmed on October 1, follows a decrease to £1,720 per year for the summer period. This impending rise is expected to impact households as colder weather prompts increased energy usage.
Dr. Craig Lowrey, a principal consultant at Cornwall Insight, expressed concerns over the anticipated cost hike, emphasizing that while the rise aims to aid those in need, it will lead to greater expenses for typical consumers despite lower wholesale energy costs. The expected £17 annual increase is estimated to collectively add over £350 million to household energy bills, varying based on individual energy consumption and geographic location.
Looking ahead, Cornwall Insight foresees a potential slight reduction in the price cap at the beginning of January, subject to geopolitical shifts, weather patterns, policy adjustments, and potential new costs to support investments in energy infrastructure. The October price increase aligns with forthcoming changes, including the extension of the Warm Home Discount scheme, designed to provide additional support to vulnerable households.
Households affected by Ofgem’s energy price cap, particularly those on standard variable tariffs, are advised to take action by exploring cheaper fixed-price deals. Scott Byrom, the chief executive of The Energy Shop, stressed the importance of proactive energy management, especially during the winter months when energy consumption peaks.
As the cost of living continues to rise, there are concerns that escalating energy bills could further contribute to inflation. Simon Francis of the End Fuel Poverty Coalition highlighted the challenges faced by families due to increased energy costs, emphasizing the need to transition towards cleaner and more affordable energy sources.
In response, a spokesperson for the Department for Energy Security & Net Zero emphasized the government’s commitment to reducing energy bills through clean energy initiatives and enhanced customer protections. By expanding support programs and enhancing consumer rights, efforts are being made to mitigate the financial impact on households during the upcoming winter season.
