As winter approaches, UK households are preparing for a rise in domestic winter energy prices, according to predictions from consultancy Cornwall Insight. The forecast suggests that a typical household could see their annual gas and electricity bill increase to £1,714 from October, marking a £146 rise from the current rate of £1,568, which has been the lowest in two years.
Official Price Cap Announcement Looms
Energy regulator Ofgem is set to announce its next quarterly price cap, sparking concerns among charities that another price hike will further strain household finances. Although the price cap is reviewed every three months, it is often illustrated in terms of an annual bill for a household using a typical amount of energy. Larger properties, which tend to consume more energy, will face higher bills, while smaller homes will generally pay less.
The cap itself limits the maximum cost per unit of gas and electricity rather than the total bill. This cap impacts approximately 28 million households in England, Wales, and Scotland, while Northern Ireland operates under a separate regulatory system.
Global Energy Market Pressures
Despite the protection offered by the price cap, households are still vulnerable to fluctuations in the global energy market. According to Cornwall Insight, wholesale energy prices paid by suppliers have risen by roughly 20% in recent months, and this increase is expected to be passed on to consumers, forming a significant portion of their bills.
Fixed Tariff Options and Future Uncertainty
With prices set to rise, some consumers may consider switching to fixed energy tariffs. However, the savings from the top 10 cheapest tariffs currently available are minimal, averaging just £5 per year compared to the default tariff under the price cap. While fixing rates may offer some certainty, Richard Neudegg from Uswitch advises caution, stating that not all fixed tariffs are guaranteed to be cost-effective. “Consumers need to weigh the value of certainty against the potential for better deals,” he said.
Cornwall Insight has warned that further price increases could be on the horizon, with a “modest” rise expected when the January price cap is announced. The ongoing Russia-Ukraine conflict may exacerbate these price hikes, potentially pushing bills higher during the colder months.
Household Finances Under Pressure
With limited government support available this winter, rising energy costs could stretch many households to their financial limits. The charity National Energy Action has expressed concern, warning that some households may be pushed “beyond breaking point.” The fixed standing charges for energy, which vary by region, currently stand at 60p per day for electricity and 31p per day for gas, adding further strain to household budgets.
While energy bills have fallen from the peak caused by Russia’s invasion of Ukraine, they remain significantly higher than pre-pandemic levels.
Energy-Saving Tips On Winter Energy Prices
As energy prices remain high, our experts at Online Journal recommend simple measures to help households keep their energy usage—and costs—down. These include adjusting boiler settings if hot water is excessively warm, managing draughts around the home, and limiting shower times to four minutes. WaterAid has even compiled a playlist of four-minute songs to help consumers stay on track.
