The regulator increased its price cap to reflect the rise in gas prices on the global market.
This change will take effect on 1 January 2024, which means that average households will begin the year with an increase of 5% in their energy bills.
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The energy regulator in Great Britain, Ofgem sets the maximum price suppliers can charge for each unit of electricity on standard variable tariffs every three months.
For the period from 1 January to 31st March, the cap on the annual price for a typical household using gas and electricity who pays by direct debit is £1,928. This is an increase from £1,834 per year in the last three months of 2023.
However, it is expected that prices will drop again after the next cap change on 1 April.
To ensure that they are correctly charged, households who have not yet done so should submit their meter readings as soon as possible.
Jonathan Brearley of Ofgem, the chief executive officer, acknowledged that people are experiencing “a difficult time”, and that any increase in bill will be concerning.
The unit rates and the standing charges are the ones that are capped. So, the more energy an individual household uses, the higher the bill. The location of a person’s home will have an effect on their bill, since the cap for electricity prices varies slightly across the UK.
Citizens Advice reported a record number of people who were unable to pay for their energy bills in the lead-up to Christmas. Citizens Advice is among the organizations that have called on the Government to provide additional targeted assistance for those in need.
Alastair Douglas is the CEO of the website TotallyMoney. He said that energy companies were instructed to contact customers in need and offer assistance. “But this doesn’t mean that you have to sit back and wait for them.” He said, “Get in contact at your earliest convenience to see if you can get a temporary repayment holiday or a repayment plan that best suits your situation.”
The latest predictions suggest that energy bills may fall by as much as 14% in April. This is a small ray of hope for consumers. Cornwall Insight, a firm that provides analytics, has forecasted that the average annual gas and electricity bill will be £1,660 by April.
Market instability and events around the world, including the Russian invasion of Ukraine and conflict in the Middle East, are blamed for the current increase.