Great Britain is gearing up for an increase in energy bills as the energy price cap is anticipated to rise by nearly 5% from April. This adjustment will affect approximately 9 million households on variable tariffs linked to the cap. The energy price cap, which limits the rate energy suppliers can charge for each unit of gas and electricity, will see its confirmation from Ofgem on February 25. Meanwhile, households on fixed tariffs will experience a delay in this increase.
Cornwall Insight, an energy consultancy firm, has revised its forecast, predicting the price cap to reach £1,823 per year for a typical household. This figure is £85 higher than previous forecasts and exceeds an earlier prediction of £1,785 for the spring. The increase stems from colder weather and a decrease in renewables, leading to depleted gas storage levels across Europe.
In January, the energy price cap saw a 1.2% rise, setting it at £1,738. Ofgem, the energy industry regulator for Great Britain, faces calls to expedite measures to mitigate the pressure of the global gas markets. The last Russian gas transported through Ukraine's pipelines ended on New Year's Day, further impacting Europe's gas reserves.
“While consumers will require urgent support in the short-term, we can’t keep papering over the cracks. Bill payers need cheaper energy and more stable prices – something that would also contain inflation and boost the economy – renewably powered heat pumps and better insulated homes are the only surefire way to deliver it.” – Doug Parr, the policy director at Greenpeace UK.
The government's commitment to reducing household energy bills by "up to £300 by 2030" faces challenges with the upcoming price rise. Renewably powered heat pumps and enhanced insulation in homes are considered viable solutions to achieve cheaper and more stable energy prices.
The energy price cap undergoes recalculations every three months to reflect changes in the market. With mounting pressures from gas shortages, Ed Miliband, the Energy Secretary, has urgently addressed Ofgem in a letter demanding faster protective actions for consumers.