Warning as 7million households face higher energy bills this winter despite expected price cap drop – are you affected?
MILLIONS of households still face higher energy bills this winter despite a predicted fall in Ofgem’s price cap.
This includes almost half of those in the poorest tenth of households, according to the Resolution Foundation.
Ofgem’s October price cap rates will be announced on Friday.
Forecasts by Cornwall Insight predict that typical bills will fall to around £1,925 a year.
It is a reduction of 7% compared to the July price cap, and the lowest it has been since March 2022.
Before July, typical bills were capped at £2,500 a year but millions received a £400 energy discount which reduced this rate to £2,100 a year.
But the headline reduction in bills by almost £200 in October still masks wide variation for households.
Although the price per unit of energy is falling, this will be offset by a rise in the daily standing charge and the fact that last winter’s universal £400 energy bill discount is not being repeated.
As a result, the biggest falls in bills will be seen by households who use the most energy – while households who consume relatively little energy will face higher energy bills this winter than last.
The Resolution Foundation calculates that households that consume less than four-fifths (79%) of typical gas and electricity consumption will see higher bills this winter.
These additional costs will often be significant.
Around one in eight households (13%, equivalent to 2.7 million households) will see winter energy bills increasing by £100 or more this year.
Jonathan Marshall, senior economist at the Resolution Foundation, said: “Ofgem is set to announce that the typical household energy bill will fall this winter, but more than one in three households across England will be shocked to discover that their energy bills could actually be higher this winter than last winter.
“This increase will be particularly acute for England’s poorest families, a quarter of whom will spend at least £100 more on energy bills this winter compared to last year.
“With these energy bill increases coming on top of a prolonged period of fast-rising food and housing costs, the cost of living squeeze is far from over.”
What will happen to energy bills in the longer term?
Cornwall Insight’s forecast sees bills rising again slightly in the future.
In the first three months of next year analysts think that electricity prices will be 29.48p and gas will be 7.72p, adding around £150 to the average annual bill.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “While a small decrease in October’s bills is to be welcomed, we once again see energy price forecasts far above pre-crisis levels, underscoring the limitations of the price cap as a tool for supporting households with their energy bills.
“As many, including energy regulator Ofgem have acknowledged, it is essential that the Government explore alternative solutions, such as social tariffs, to ensure stability and affordability for consumers.”
He added: “Looking ahead to next year, we see how events on the other side of the globe have impacted gas prices and our subsequent price cap predictions.
“In the same way as we saw wholesale market volatility impact our cap forecasts last year, similar developments risk causing sharp changes in household bills in 2024.
“The UK’s structural reliance on gas imports means that it is highly susceptible to fluctuations in the international wholesale energy market.”
What energy bill help is available?
Millions are also in line to receive cost of living payments worth up to £1,350.
The first instalment of the £900 payment has been paid to millions on certain benefits, including Universal Credit and Pension Credit.
A further two payments are due in the Autumn and Spring of 2024.
Plus, pensioners who are entitled to a Winter Fuel Payment for winter 2023/24 will get an extra £150 or £300 paid on top of their normal payment later this year.
Energy suppliers also offer plenty of energy grants and schemes to help you out if you’re struggling.
Here’s a list of schemes open right now:
- British Gas Energy Trust Individuals and Family Fund
- EDF Customer Support Fund
- E.ON and E.ON Next Grants
- Octopus Energy Assist Fund
- Ovo Energy
- Scottish Power Hardship Fund
There’s a one-off fuel voucher from your energy supplier if you’re on a prepayment meter.