Energy Bills Set to Rise Again: What You Need to Know

Price cap set to rise

Starting in April, millions of homes across Great Britain will face higher-than-expected energy bills after the industry regulator, Ofgem, announced a price cap increase. This will be the third consecutive rise, adding more financial pressure to households already grappling with high costs.

The new cap will push the average annual energy bill for a typical household to £1,849—an increase of £111. This surge is due to the continuing rise in energy market prices, a trend that’s been in motion since Russia’s invasion of Ukraine three years ago. As a result, households will now pay approximately £600 more per year than they did before the war, reflecting a 6.4% rise in gas and electricity costs.

Higher than expected

This increase is significantly higher than the 1.2% rise that analysts had predicted just a couple of months ago. Cornwall Insight, a consultancy firm, noted that energy market prices have surged across Europe, suggesting that prices could climb even further. About 9 million homes, which use variable tariffs, will feel the immediate impact when the new price cap kicks in. Those on fixed tariffs will experience the hike later on.

One important thing to note is that the price cap only limits the rate suppliers can charge per unit of energy, not the total bill. This means households that use more energy than the average will see even higher bills. From April, the price per kilowatt-hour of electricity will rise from 25p to 27p, while gas prices will jump from 6.34p to 6.99p. The standing charge for electricity will also decrease slightly, while gas standing charges will see a small increase.

Cause for concern

The news has sparked concern among campaigners, who argue that for many households already struggling to cover their bills this winter, this third consecutive price hike will be unbearable. The increase could also put additional pressure on the Labour government, which promised that by 2030, households would see their energy bills fall by £300 per year as part of their clean power plans.

In response to the price hike, Energy Secretary Ed Miliband pointed to the challenges posed by volatile fossil fuel markets and reaffirmed the government’s goal of making Britain a “clean energy superpower.” He emphasized that investing in clean, homegrown energy would be the key to reducing bills for good.

To provide some relief, the government has announced plans to expand the Warm Home Discount scheme. This program, which provides eligible households with £150 off their winter energy bills, will now extend to an additional 2.7 million homes, including nearly 1 million families with children. If these plans move forward, the number of families receiving this discount could rise to 6.1 million by next winter, representing one in five households in Britain.

Rising debt

Additionally, ministers are working with Ofgem to address the growing issue of energy debt. The aim is to help lower the financial burden by reducing bills by £25 to £30 per year for struggling households.

However, not everyone is convinced these measures go far enough. Campaigners have expressed concerns that the price cap increases and the ongoing energy crisis are pushing vulnerable households to the brink. National Energy Action, a charity focused on fuel poverty, warned that many people are already rationing their heating to dangerous levels, and rising debt is a serious concern. Citizens Advice also pointed out that families with children are particularly affected, with over one-third of these households struggling to afford their energy bills, and the situation is even worse for those on low incomes.

Is solar right for you?

As the energy crisis continues, many are calling for more immediate support and long-term solutions to protect families from future price hikes. The situation remains precarious, and with energy costs expected to remain volatile, it’s clear that this issue will remain a major concern for many households in the months ahead.

If you want to step of the roller coaster of price rises and uncertainty, why not consider investing in solar power? There are payment plans available which would cost you no more than your current bills, with the added peace of mind that they would not be rising year on year.

If you would like to book a free no obligation chat to see how solar could benefit you, please do get in touch, we would be happy to see if it right for your home and circumstances, with no hard sell!