It comes as a cold snap grips the UK
Energy bills for numerous households are set to increase on Thursday, coinciding with a series of cold health alerts issued across vast regions of the UK. The 0.2% hike in Ofgem’s energy price cap will translate to an approximate monthly rise of 28p for the average household in England, Wales and Scotland that remains on a standard variable tariff.
This results in an average annual bill of £1,758, a slight increase from the current £1,755. The regulator attributed the rise, announced last November, to the financing of nuclear power projects and winter bill discounts for certain households. This includes funding for the Government’s Sizewell C nuclear power plant in Suffolk – adding an average of £1 per month to each household’s energy bills throughout the £38 billion construction period. A rise in standing charges – the daily rate consumers pay for energy supply to their homes – was also largely due to costs associated with the Government’s Warm Home Discount scheme.
Approximately 2.7 million additional low-income households, including 900,000 families with children, qualify for the £150 discount this winter. However, the regulator noted that the new price cap is £37 lower than it was a year ago when adjusted for inflation. Ofgem’s price cap establishes a maximum rate per unit and standing charge that customers can be billed when they are not on a fixed tariff. It does not limit total bills as households still pay for the amount of energy they consume, reports Lancs Live.
The price cap hike coincides with a yellow warning for snow and ice issued for regions of Scotland north of the central belt, effective from 6am on New Year’s Day until midnight on January 2. Concurrently, amber cold health alerts have been activated for the North East and North West of England, set to remain in effect until noon on January 5, as temperatures are predicted to drop to 3-5C.
The UK Health Security Agency has also issued yellow cold health alerts for London, the East, South East, and South West of England, as well as the East and West Midlands and Yorkshire and the Humber. Simon Francis, coordinator of the End Fuel Poverty Coalition, commented: “It really is a case of every little doesn’t help as households spend a fifth winter in the energy bills crisis. Tiny movements in the price cap still hit hard for families choosing between heating and eating.
“People continue to live in cold, damp homes, where the risks go beyond discomfort and into real danger, including exposure to carbon monoxide. Younger adults, private renters and households with children are among those most at risk as people cut back on heating, delay repairs and try to block draughts just to stay warm.
“Meanwhile, the broader energy sector has generated over £125 billion in UK profits since 2020, including companies operating in a declining North Sea. This isn’t a crisis of scarcity, it’s a crisis of priorities. Ministers must move beyond short-term price cap tweaks and get serious about ending fuel poverty by investing in energy efficiency, reforming energy pricing, introducing a fair social tariff and fully funding the Warm Homes Plan.”
Which? energy editor Emily Seymour said: “As we head into the coldest months of the year, many households will be concerned that the energy price cap will increase slightly in the new year.
“There are several deals on the market for lower than the price cap so now is a good time to shop around if you’re looking to fix. As a rule of thumb, we’d recommend looking for deals cheaper than the current price cap, not longer than 12 months and without significant exit fees.
“If you’re on a variable tariff, make sure to submit a meter reading to ensure you pay the cheaper rates for any energy used before the new price cap takes effect.”