Household energy bills to rise by 5% in January as Ofgem increases price cap to £1,928
As temperatures are set to fall, energy bills are set to rise once again.
The fact that it is due to rising wholesale prices will be cold comfort for those already struggling, as ITV News' Graham Stothard found out
The average household energy bill will rise by £94 a year from January after Ofgem increased its price cap in response to rising wholesale prices.
Ofgem announced it is raising its price cap from the current £1,834 for a typical dual fuel household to £1,928 from January 1.
The move is driven almost entirely by rising costs in the international wholesale energy market due to market instability and global events, particularly the conflict in Ukraine.
It puts hopes for relief from the cost-of-living crisis on hold, and comes after Chancellor Jeremy Hunt made no mention of any further help from the government to offset household energy bills in Wednesday's autumn statement.
What does it mean for you?
In short, the change to the price cap means that for every £100 you pay now on your energy bills, from January you will be paying £105 - an increase of 5%.
So, if your energy bills are currently costing you £200 per month, it will cost you an extra £10 from the start of 2024.
Over the course of a 12-month period, this rise in bills would cost you over an extra £100.
How does the price cap work?
The energy price cap was originally introduced in 2019 and sets a limit on the maximum amount suppliers can charge households in England, Wales and Scotland for each unit of gas and electricity.
Energy in Northern Ireland is regulated separately.
The headline price cap figure is an average across households rather than an absolute cap on bills, so those that use more will pay more.
Suppliers cannot charge more than the price cap, although they may charge less.
Ofgem chief executive Jonathan Brearley said: "This is a difficult time for many people, and any increase in bills will be worrying.
"But this rise - around the levels we saw in August - is a result of the wholesale cost of gas and electricity rising, which needs to be reflected in the price that we all pay.
"It is important that customers are supported and we have made clear to suppliers that we expect them to identify and offer help to those who are struggling with bills.
"We are also seeing the return of choice to the market, which is a positive sign and customers could benefit from shopping around, with a range of tariffs now available offering the security of a fixed rate or a more flexible deal that tracks below the price cap.
"People should weigh up all the information, seek independent advice from trusted sources and consider what is most important for them, whether that’s the lowest price or the security of a fixed deal."
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