Ofgem has announced household energy bills will increase by 6.4 per cent from April. The industry regulator confirmed on Tuesday morning annual energy bills for millions of households on the standard tariff, with typical average usage, will rise from £1,738 to £1,849 from April 1 – an increase of £111 over the coming year (£9.25 per month)
Ofgem changes the price cap for households every three months by setting a maximum price energy companies can charge people in Scotland, England and Wales for each unit of energy they use. However, it’s crucial to remember the price cap does not limit a household’s total energy bills, people still pay for each unit of gas and electricity they use which means the more energy you use, the higher the bill, similarly, the less you use, the lower the costs.
The new price cap is 9.4 per cent or £159 higher than this time last year but £531 or 22 per cent lower than at the height of the energy crisis at the start of 2023.
Ofgem said a recent spike in wholesale prices was the main driver of the price rise, accounting for around 78 per cent of the total increase, while a small increase in policy costs and associated inflationary pressures made up a further 22 per cent.
Ofgem chief executive Jonathan Brearley said: “We know that no price rise is ever welcome, and that the cost of energy remains a huge challenge for many households. But our reliance on international gas markets leads to volatile wholesale prices, and continues to drive up bills, which is why it’s more important than ever that we’re driving forward investment in a cleaner, homegrown system.
“Energy debts that began during the energy crisis have reached record levels and without intervention will continue to grow. This puts families under huge stress and increases costs for all customers. We’re developing plans that could give households with unmanageable debt the clean slate they need to move forward.
“We welcome the Government’s support for these plans, and their plans to expand the Warm Home Discount, which will also offer financial help to nearly three million more households that need it most.
“If anyone is worried about paying their bills, I would urge them to reach out to their supplier to make sure they’re getting all the help they can. Where possible, switching or fixing tariffs now could also help to bring costs down and provide certainty over coming payments.”
Standing charges from April 1
Electricity
- If you are on a standard variable tariff and pay for your electricity by Direct Debit, you will pay on average 27.03 pence per kilowatt hour (kWh). The daily standing charge is 53.80 pence per day.
Gas
- If you are on a standard variable tariff and pay for your gas by Direct Debit, you will pay on average 6.99 pence per kilowatt hour (kWh). The daily standing charge is 32.67 pence per day.
Emily Seymour, Which? Energy Editor, said: “The news that the energy price cap will rise by 6.4 per cent in April and is predicted to continue rising over the next year will understandably be worrying for many households.
“It’s well worth shopping around for energy deals to see if you could save money by switching. Unfortunately, there’s no ‘one size fits all’ approach when it comes to fixing an energy deal – the best option for your home will depend on your individual circumstances.
“You should compare what your monthly payments would be on a fixed deal with what you’d expect them to be if you remain with the price-capped variable tariff to see what the best option is for you. As a rule of thumb, we’d recommend looking for deals cheaper than the price cap, not longer than 12 months and without significant exit fees.
“If you’re worried about affording your bills, don’t suffer in silence. Speak to your energy company – they are obliged to help you if you’re struggling to pay your bills.”
James Watson-O’Neill, Chief Executive of the national disability charity Sense, said: “Yet another increase in the energy price cap – the third in a row – will dismay many disabled people.
“Disabled households are telling us they’re living in crisis. The need to power crucial equipment, such as feeding machines and hoists, means many disabled people have no choice but to use extra energy. Our research clearly shows that many disabled people with complex needs are already struggling to afford their energy bills, with more than two in five (42%) telling us they can’t afford to keep their home warm enough.
“Disabled people are more likely to be in fuel poverty than non-disabled people, and we know it’s not just extra energy bills that can hit hard. There are also the extra costs associated with specialist diets, insurances, therapies and accessible transport that disabled people need to contend with. An increase in energy costs is the last thing disabled people need.
“There is no end in sight and disabled people cannot be left waiting any longer for targeted help with their energy bills. We need the government to urgently implement a social energy tariff, to help level the playing field for those who rely on energy-intensive equipment.”
While the price cap will go up in a few weeks’ time, in practice, most people will pay less to their energy suppliers in the spring and summer months due to lower usage during the warmer months.