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Energy bills for many homes will rise from today, just as a series of cold health alerts are issued across large swaths 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. EnglandWales and Scotland still have standard variable tariffs.
This equates to an average total annual bill of £1,758, up from the current £1,755.
However, experts at Cornwall Insight predict that energy bills will fall by £138, or 8%, to £1,620 a year when the cap is next updated in April, thanks to the government measures announced in the recent budget.
headmaster Rachel Reeves It said the average household bill would be reduced by £150 from April by scrapping the Energy Company Obligation (Eco) scheme proposed by the Conservatives in government.
Wholesale energy prices have also fallen in recent weeks, which will curb price increases since April, Cornwall Insight said.
regulator Natural gas power market The cap increase announced in November was driven by financing for nuclear power projects and discounts on some households’ winter bills, it said on Thursday.
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.
Ned Hammond, Deputy Director british energyA representative representing suppliers said: “While the newly-in force price caps only include small increases, they still mean energy bills are too high for too many households. Gas prices may have fallen in recent months but are still higher than in previous years, while increasing policy costs are also adding to bills.”
“The chancellor’s intervention in the budget, which shifts significant policy costs into tax, is welcome and will provide much-needed relief to households across the country when it comes into force in April.
“However, even with this intervention, energy bills are expected to remain well above pre-energy crisis levels. With more than six million households falling into fuel poverty and domestic energy debt reaching an all-time high of around £5.5 billion, a comprehensive plan is needed to further reduce bills and truly tackle these challenges.”
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.”
Dr Craig Lowrey, chief adviser at Cornwall Insight, said: “Households will welcome April’s rate cut, which will reduce the cap to the lowest level since 2024. It is a step towards the government’s target of £300 cuts by 2030 and will relieve some pressure on households and policymakers.”
“But let’s be clear – costs are not going away, they are changing. Moving renewable energy obligations from bills to taxes may feel like a win, but ultimately, it will still be paid by the public.
“It is vital that vulnerable households are protected as we move forward. Today’s bill cuts are welcome, but without a clear plan for targeted support and fairer funding, the benefits of net zero may bypass those who need it most.”