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Domestic energy prices have risen with little respite expected for billpayers during the rest of the year. The second increase in Ofgem’s price cap this winter takes effect on Wednesday and means someone paying by direct debit and using a typical amount of gas and electricity will pay £1,738 a year. That is £21 a year more than under the previous cap, so billpayers are being urged to submit a meter reading to avoid overpaying on estimated usage.
Bills are about 50% higher than pre-Covid levels, and analysts predict they will rise by a further 3% in April.
The regulator, Ofgem, which sets the cap covering 26 million households in England, Wales and Scotland, has urged people to shop around for the best deal. The best fixed-price deals are cheaper than tariffs based on the price cap. While these deals offer certainty, anyone signing up to one risks missing out were prices to fall before the fixed element expires.
Owing to rising wholesale prices, analysts at energy consultancy Cornwall Insight predict an additional rise in the price cap in April of nearly 3%. It has forecast prices to then drop in July, only to rise again in October. Prices jumped in 2022 when conflict between Russia and Ukraine broke out. Analysts and regulators admit prices and the situation globally are still volatile and difficult to predict.
Many households will worry about energy prices rising, albeit by only 1%, at the coldest time of the year. Campaigners are calling for an insulation programme to help those in the toughest financial circumstances to reduce their bills. “We need long-term solutions,” said Caroline Simpson, from Warm This Winter, which speaks for 40 charities.
Energy companies are urging those not on a smart meter to submit an accurate reading immediately. “If you leave it any later than this, then some of your December energy usage could end up being estimated and therefore charged under the higher January rates,” said Elise Melville, from price comparison website Uswitch.
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