Millions of Brits face higher energy bills as price cap rises – again: 'We need long-term solutions'

More than nine million homes will face higher energy bills from today (January 1) as the latest Ofgem price cap takes effect.  

The average energy charge for households in England, Wales and Scotland will increase to £1,738 per year, up 1.2% from the previous annual fee of £1,717.

It comes as much of the UK prepares for freezing weather, wind and snow – and is “dangerous” news for struggling households, charities have warned.

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“The most vulnerable people will sink into further difficulties and acute hardship,” said Peter Smith, director of policy and advocacy at National Energy Action. He spoke to the Big Issue when the 1.2% increase was announced in November.

“With unaffordable energy bills and far less support available nationally this winter, millions of people are already rationing their energy use to dangerous levels or getting deeper into debt trying to keep warm.”

The £21 hike may seem modest – but it is merely the latest in a series of consecutive increases. The latest price cap rise means energy bills will be 67% above what they were in winter 2020/21.

And relief is not forthcoming. Bills are forecast to rise yet again when the price cap is next set in April, analysis by consultants at Cornwall Insight suggests.

The predicted £1,785 annual charge is nearly £600 a year more than in February 2022, when Russia’s invasion of Ukraine spiked gas prices. Meanwhile, 20 energy firms have made more than £483bn in profits over this period.

What is the Ofgem energy price cap and why is it rising?

Every three months, Ofgem – the energy industry regulator – sets the maximum price that companies can charge customers per unit of energy.

The £1,738 figure reflects what the typical household will now pay. But you could still pay more if you use more units of electricity. For example, bills for a hard-to-heat four-bedroom house will likely exceed £2,400.

The latest increase can be attributed to a seasonal rise in wholesale energy costs, which peak in the winter. Long-term energy security trends around the war in Ukraine are also to blame.

According to new research from the Warm This Winter campaign, three quarters (74%) of the public are worried about the global insecurity of energy prices over the next five years.

With market volatility expected to continue for some time, campaigners are calling on the government to increase the fuel efficiency of British homes.

“As the latest price cap rise means energy bills will be 67% above what they were in winter 2020/21 we need long-term solutions,” said Warm This Winter spokesperson Caroline Simpson.

“We have 8.8 million adults living in cold damp homes, exposed to the health complications that come from living in fuel poverty and while we welcome recent initiatives from Ofgem, insulation and ramping up renewables to get us off volatile oil and gas for good, is what we need.

The new Labour government’s plans on net zero will result in household bills being £300 less than they otherwise would by 2030.

But campaigners have also criticised the government for failing to provide short-term relief. The decision to means-test the winter fuel payment, for example, will plunge millions of pensioners into poverty.

National Energy Action (NEA) estimate that around six million people are living in fuel poverty, up from 4.5 million people in October 2021. Support is available for struggling households; more information can be found here.

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