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Energy bills for many households are set to rise on Thursday, as a series of cold health warnings are issued across large swathes of the UK.
Ofgem’s 0.2% increase in energy price caps is equivalent to a monthly increase of around 28p for the average household in the country. England, Wales and Scotland Standard variable tariffs remain in place.
This equates to an average total annual bill of £1,758, up from the current £1,755.
The regulator said the increase was driven by financing for nuclear power projects and discounts on some households’ winter bills, which it announced in November.
These include funding for the government’s Sizewell C nuclear power station in Suffolk – which will increase energy bills by an average of £1 per household per month during its £38bn construction period.
The increase in fixed charges – the amount consumers pay each day to power their homes – was mainly due to costs associated with the government’s Warm Homes Discount scheme.
Around 2.7 million more low-income households, including 900,000 with children, will be eligible for the £150 discount this winter.
However, the regulator said the new price cap was £37 lower than a year ago, after adjusting for inflation.
Ofgem’s price caps set out the maximum rate per unit and the fixed charge that can be charged to customers when they do not have a fixed rate.
It does not limit the total bill because households still pay for the amount of energy they consume.
The increase in price caps comes as a yellow warning for ice and snow is issued for parts of Scotland north of the central belt between 6am on New Year’s Day and midnight on January 2.
Meanwhile, a Yellow Cold Health Alert has been issued northeast The weather is expected to last until midday on January 5 in northwest England, with temperatures expected to drop to 3-5C.
The UK Health and Safety Agency (UKHSA) has issued a Yellow Cold Health Alert for London, the East, South East and South West of England and the East Midlands, West Midlands, Yorkshire and Humber regions.
Simon Francis, coordinator of the Alliance to End Fuel Poverty, said: “As households spend a fifth winter in crisis over their energy bills, it’s really not helping at all. Small changes to the price cap are still hitting hard at households making the choice between keeping warm and eating.
“People continue to live in cold, damp homes where the risk is not just discomfort but real dangers, including exposure to carbon monoxide. Young people, private renters and families with children are those most at risk as people reduce heating, postpone repairs and try to block drafts just to stay warm.
“Meanwhile, the wider energy sector has generated over £125 billion in profits for the UK since 2020, including for companies operating in the dying North Sea. This is not a crisis of scarcity but a crisis of priorities. Ministers must move beyond short-term price caps and seriously tackle energy poverty by investing in energy efficiency, reforming energy pricing, introducing a fair social tariff and fully funding warm homes schemes.”
Which? Energy editor Emily Seymour said: “As we enter the coldest months of the year, many households will be worried about a slight increase in energy price caps in the new year.
“There are several deals on the market below the price cap, so now is a good time to shop around if you’re looking to get a fix. As a rule of thumb, we recommend looking for deals that are cheaper than the current price cap, are no older than 12 months, and don’t involve significant exit fees.
“If you are on variable electricity prices, be sure to submit a meter reading to ensure you are paying a cheaper rate for any energy you use before the new price cap comes into effect.”