UK families warned to expect higher energy bills next week

Struggling families should expect a tough winter ahead after a jump in gas market prices, analyst predicts.

Households have just five days to wait before they find out what they will be paying for their gas and electricity from January 1 2024 – but experts are warning the price cap is likely to rise again after a small drop since October 1. Energy bills for the average household are expected to rise by 5% to about £1,930 a year when the new cap is announced this Thursday, November 23, to come into effect on January 1, 2024.

Martin Young, an analyst at the investment firm Investec blamed a jump in gas market prices for the predicted hike from the £1,834 bill the average household is paying now. And Cornwall Insight, a leading energy consultancy, has estimated that the price cap for the first quarter of next year could rise to almost the same as Investec’s prediction, to £1,931 for the typical household.

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  • Craig Lowrey, a principal consultant at Cornwall Insight, told The Guardian: “An unstable wholesale energy market, coupled with the UK’s reliance on energy imports, makes it inevitable that energy bills will rise from current levels. This leaves households facing yet another winter with bills hundreds of pounds higher than pre-pandemic levels, and affordable fixed deals few and far between.”

    The concern over rising energy costs has been compounded by the increase in standing charges, which suppliers add to bills as a flat daily fee to cover the cost of connecting households to their energy supplier. Anger has been mounting over the daily charges, which adds up to around £320 a year for every household in the North East, prompting watchdog Ofgem to ask billpayers, charities and businesses to give their views and suggestions on how to change the system.

    North East households pay among the highest standing charges for their electricity in the UK. The average UK household currently pays 53p a day for electricity but families in the Northern region pay 57p. Gas standing charges are the same as the average of just under 30p a day. And analysts at Cornwall Insight have predicted a rise in electricity standing charges from April 2024 of 8p per day.

    There has been increasing concern over the fees, which have risen by up to 60% in two years, as they limit customers’ inability to reduce what they pay in the cost of living crisis. MoneySavingExpert founder Martin Lewis has long campaigned for the charges to be lowered, arguing that they unfairly penalise households on lower incomes and those looking to cut their usage as there is only so much they can save from doing so.

    The current price cap, which was set at the end of August, saw a drop of around £250 from the beginning of October, but costs have remained the same for most households as the Government has axed across-the-board help to take the chill off heating bills this year. While the cap fell, the Energy Bills Support Scheme will no longer gave a £400 rebate from the Government to keep costs down.

    Almost all UK households currently have energy bills limited by the Ofgem price cap, which is set four times a year by regulator Ofgem. It is important to understand the price cap does not limit the amount you will pay over the course of a year. The headline figure is simply how much what Ofgem deems a ‘typical household’ will pay for the year. Instead, it caps the rates at which you are charged for your gas and electricity usage, as well as the standing charges for both.

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