Domestic energy prices are projected to surge by 5% from April, affecting 26 million households across England, Wales, and Scotland. The new price cap, set by the regulator Ofgem every three months, will be officially announced on 25 February. This change is expected to add £85 annually to the bills of households on default, variable tariffs.
Currently, a household using a typical amount of gas and electricity pays approximately £1,738 per year. With the impending increase, this figure is forecasted to rise to £1,823, according to Cornwall's projections. This adjustment comes at a time when households are already grappling with financial strain, as the average household in arrears owes more than £1,500 for electricity and £1,300 for gas.
In January, there was a modest 1.2% increase, translating to an additional £1.75 monthly compared to the previous cap. However, the April hike coincides with other financial burdens, such as increases in water and council tax bills, exacerbating the situation for many families.
The Ofgem price cap aims to limit the maximum amount suppliers can charge per unit of gas and electricity. However, with a collective debt of £3.8 billion owed by households to suppliers, the upcoming rise is likely to deepen financial woes. As the cost of living continues to climb, experts have emphasized the importance of efficient energy use during the warmer months to mitigate expenses.