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Householders in Britain will face higher energy bills this winter after the regulator raised the price cap. by 10 per cent.
Ofgem announced that the average home energy bill will increase from £1,568 to £1,717 on 1 October. It means a typical household’s annual energy bill will rise by £149.
The regulator sets the price limit for each unit of energy used based on several factors including wholesale energy prices – the amount energy providers pay for gas and electricity before supplying it to households.
The limit changes every three months – in January, April, July and October. Energy prices have fallen twice this year – in April and July – but are set to move back up.
The rise means the cost of each kilowatt hour (kWh) of energy will be higher at the start of winter than during the summer. Nevertheless, average bills remain considerably lower than during the peak of the energy crisis, which was fuelled by Russia’s invasion of Ukraine in February 2022, driving up costs in an already-turbulent energy market.
In October last year, the price cap was £1,834.
Cornwall Insight also said there is likely to be a further “modest” increase in January 2025, with more rises possible early in the new year due to escalating tensions in the Russia-Ukraine war.
Jess Ralston, head of the Energy and Climate Intelligence Unit, said bills in winter will be about 50 per cent higher than they were pre-crisis on average.
“A lack of progress on energy efficiency and heat pumps means that our reliance on gas hasn’t fallen much in recent years, despite the volatility in the international markets forcing bills to skyrocket,” she said.
“With the removal of the winter fuel payment for some pensioners at the same time as bills going up, it’s likely that some will struggle and it remains to be seen if the government will bring in measures to support those worst hit by the removal of winter fuel payment.”
The new government decided to stop winter fuel payments for those who are not in receipt of pension credits or other means tested benefits.
Previously, the payments of up to £300 had been available to everyone above state pension age.
The Treasury said the changes would see the number of pensioners receiving the payments fall from 11.4 million to 1.5 million – so just under 10 million would miss out.