Energy Price Caps rising in January, putting pressure on the households
The coldest time of the year is coming soon and household energy prices are about to rise. The rise will come in action from January and house-owners are clueless about how to handle this financial pressure. Energy regulator Ofgem said that the typical annual household bill is about to rise around 5%. The previous average household expenses for energy was £1,834 which is rising up to £1,928, a rise of £94.
According to the experts, the rise in energy bills will make it very difficult for homeowners to survive on a tight budget as there is no significant increase in their earnings. But this is the result of higher wholesale costs and now, the suppliers are trying to make that up by charging the consumers more. Financial analysts predicted that the price of energy will fall in March. However, this sudden rise in energy prices is not complying with the prediction.
The regulator’s price cap will affect 29 million households in England as well as Wales and Scotland. The rules of price cap are a bit different in Northern Ireland. Ofgem has set the maximum amount and value that suppliers can charge from the consumer based on each unit of gas and electricity, but not the total bill. Therefore, one has to pay more if they use more. Precisely, the cost of gas will rise up to 7p per kilowatt hour (kWh), and on the other hand, electricity will be 29p per kWh.
Chief Executive of Ofgem, Jonathan Brearley said, “It is important that customers are supported and we have made clear to suppliers that we expect them to identify and offer help to those who are struggling with bills.”
Principal Consultant at energy analysts Cornwall Insight, Dr Craig Lowrey said, “Amid the cost-of-living crisis, the last thing households need is a rise in energy bills – especially going into the winter months.” He further added, “However, as is often the case in the energy market, new challenges have arisen, and our reliance on foreign energy has once again left the UK vulnerable to price increases caused by events around the globe.”
A lot of citizens in England and struggling to pay the energy prices already and another rise in January would be devastating for them. People are more likely to get debt for paying such a high energy price. Most customers are likely to pay a top-up just before they are in dire need of gas and electricity. Their typical annual bill for energy is going up to £1,960 in January.
Those who pay their bill every three months via cash and cheques, have to pay more for using other methods of payment. Their typical bill in January is likely to go up £2,058, around £130 more a year than paying by direct debit. Director of energy at Citizens Advice, Gillian Cooper said, “Yesterday, the government missed the opportunity to announce extra support for households who desperately need it this winter.”
I am Jessica Gonzalez and i have over 16 years experience in the financial services industry giving me a vast understanding of how news affects the financial markets. She is an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.
