Energy bills tipped to rise within weeks as price cap slammed as ‘not fit for purpose’ | Personal Finance | Finance

Millions of households will see their energy bills rise again at the start of January, a new forecast warns.

Industry regulator Ofgem is expected to announce next Thursday that the energy price cap will be raised to 28.94p per unit of electricity and 7.42p per unit of gas from the start of next year.

It means the average household bill will rise from £1,834 a year to £1,931, according to consultancy experts. A view of Cornwall.

This represents Cornwall’s final estimate of the price cap before Ofgem announces the level next week.

Ordinary bills are then expected to fall to £1,853 from the start of April, but will not fall below today’s level until July next year.

Dr Craig Lowrey, chief consultant at Cornwall Insight, said: “Due to an unstable wholesale energy market, coupled with the UK’s reliance on energy imports, it is inevitable that energy bills will rise from current levels.

“This leaves families facing yet another winter with bills hundreds of pounds higher than pre-pandemic levels, with steady affordable deals few and far between.”

He added: “The King’s Speech acknowledged that our exposure to volatile international energy markets is causing higher and less predictable bills.

“While we continue to support targeted immediate support for vulnerable consumers, it is clear that the only lasting solution is to move the UK away from the impact of global energy prices towards sustainable, domestically sourced energy.”

The consultants also warned that their forecasts suggest that the fixed charge will rise by 8p per day from the start of April.

All households must pay the fixed change, meaning any increases disproportionately affect those who use less energy.

Cornwall said the milder weather recently is helping to keep gas prices down, and this could help keep bills down next year if it continues. However, he noted that “a sharp drop in price is not expected”.

Richard Neudegg, director of regulation at, said: “A week before the price cap was announced, this is a firm prediction that energy costs for households on standard variable tariffs will rise by five per cent in January.

“This price increase will come at the worst time of the year for households, who will be using more energy at home during one of the coldest points of the winter.

“Consumers on standard variable tariffs are particularly exposed to changes in the wholesale energy market, as the price cap now changes every three months.”

Mr Neudegg pointed out that the quarterly price change is causing “additional financial uncertainty” for consumers, as it is challenging to budget for a bill when rates can change so frequently.

He added: “Fixed rate deals are still the only way consumers can have any certainty about what they will pay for energy over a year.

“Ofgem still needs to do more to encourage suppliers to offer fixed deals more widely and at more competitive prices.

“The price cap is no longer fit for purpose, and the system needs to be reformed to create a more competitive market, which also protects families.”

The official cap announcement from Ofgem is scheduled for 23 November.

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