Energy prices will increase in April for millions of consumers in the UK, at a time when budgets are tight. So are home energy prices set to be rising?
The electricity authority, Ofgem, reported that the price limit on default domestic energy agreements will be raised to offset extra costs incurred by producers. The average gas and electricity bill would most definitely rise by £96 to £1,138 a year. Charities say that the timing is a “double whammy,” since the government’s Covid-related funding programmes are being phased out. The rise was triggered by rising wholesale prices, according to Ofgem. They went on to say that the price limit saved households £100 a year and allowed them to turn to a cheaper offer.
Are People In The UK Having Financial Difficulties?
According to Citizens Advice, 2.1 million households were late on their electricity bills in December, a 600,000 rise from before the pandemic. It was concerned that the potential elimination of funding for universal credit recipients and the slowing down of other government financial support programmes would result in severe debt problems. It might be time to search at new market deals and see what options are available to help you save money on your energy. There are several opportunities to save money by still becoming environmentally conscious. More information can be found on our environmental website.
Who Is Impacted From The Price Rise?
The price limit, which is set twice a year by the regulator, applies to 11 million households in England, Wales, and Scotland. They have never changed vendors or let their discounted rates end. Northern Ireland sets its own limit.
This constitutes about half of all families in the United Kingdom. The majority are on so-called fixed-term terms and would be unaffected. The ceiling on prepayment metres would increase by £87 to £1,156, impacting four million consumers. The quotas limit the rates that retailers will charge for each unit of electricity. They may not, though, restrict the amount of money that customers will spend. The greater your tax, the more gas and energy you need.
What Is Causing The Price Increase In The UK?
In October, Ofgem cut the price limit by £84. However, with the April surge, it has more than reversed the trend. Higher wholesale market rates also resulted in an additional allowance for retailers to raise prices. It also has the choice of charging an extra £23 a year to offset outstanding bills. Any more pause in recouping these expenses, according to Ofgem, will only result in higher costs the next season. Charities claim that raising the premiums of these tariffs on all will result in a rise in the number of citizens who are unable to compensate.
So are home energy prices set to be rising – yes for some people. But you can save money by switching your energy supplier.
*Data sourced from BBC News article