The energy price cap, which impacts the bills of 26 million homes in England, Wales, and Scotland, is set for a significant increase. Ofgem, the energy regulator responsible for setting this cap every three months, will announce the new limit at 07:00 GMT on 1 April. Analysts have predicted a 5% rise in prices, driven by increased wholesale costs due to colder weather and diminished gas storage levels across Europe.
As households brace for this adjustment, the financial strain is evident. Collectively, households have accrued a debt of £3.8 billion to energy suppliers. With bills currently about 50% higher than pre-Covid levels, many are already struggling. The average household in arrears owes approximately £1,500 for electricity and £1,300 for gas, highlighting the growing fiscal challenge.
Cornwall Insight, a consultancy firm, forecasts that a typical household using standard amounts of gas and electricity will see an additional £85 added to its annual bill starting in April. This increase will bring the total annual cost for a typical household to £1,823. The ongoing period of elevated prices marks the third consecutive rise in energy bills, making it a pressing concern for many families.
The price cap serves as a safeguard by limiting the amount suppliers can charge for each unit of energy. However, households on default or variable tariffs are particularly affected, facing immediate impacts from these adjustments. The current economic climate underscores the volatility tied to energy costs.
Simon Francis, co-ordinator of the End Fuel Poverty Coalition, expressed concerns over the persistent high energy bills:
"The burden of high energy bills has gone on long enough and as long as our energy bills remain tied to the cost of gas, households continue to be at the mercy of global markets and the fossil fuel industry."
Francis further emphasized the necessity of transitioning away from gas reliance while supporting vulnerable households:
"But alongside the transition away from reliance on gas, it's crucial to provide support for vulnerable households struggling with energy costs now and to invest in improving energy efficiency of homes."
As the nation heads into warmer months, experts have shared three tips to help households manage energy consumption effectively. These measures could offer some relief amidst rising costs.