The forecasted announcement by energy regulator Ofgem regarding the energy price cap next week means that the average gas and electricity bill will decrease to £1,823 per year starting in October, according to Cornwall Insight. However, consumer groups caution that prices are still unacceptably high, despite the drop from the July to September level of £2,074 per year. Analysts also predict that bills will rise again in January to an average of £1,979 per year due to the recent surge in global gas market prices caused by strikes at large gas projects in Australia.
Craig Lowrey, a principal consultant at Cornwall Insight, highlights that although there will be a slight decrease in bills from October, the energy price will still be significantly higher than pre-crisis levels. This emphasizes the limitations of the price cap as a tool for supporting households with their energy costs. The introduction of the energy price cap in January 2019 meant that it always remained below £1,300 per year until the global energy crisis caused by Russia’s invasion of Ukraine. This rapid increase led the government to implement an energy price guarantee, as it raised concerns about the affordability of bills for millions of households living in fuel poverty. It also sparked calls for a more affordable “social tariff” for the most vulnerable individuals.
Lowrey suggests that the government should explore alternative solutions, such as social tariffs, to ensure stability and affordability for consumers. In an interview with The Guardian, Ofgem’s chief executive, Jonathan Brearley, agrees that the current price control is too broad and crude during the energy crisis and calls for a more rigorous framework to provide support for customers.
Ofgem is expected to announce a modest decrease in the unit price for gas and electricity next Friday, taking into account the fall in prices on the global gas markets since last year’s record highs. However, the cap will also appear lower because Ofgem has modified how it calculates the average energy bill. By assuming that households will use 7% less electricity and 4% less gas, the October price cap would be nearly £100 per year higher at £1,925, according to Cornwall Insight.
Simon Francis from the End Fuel Poverty Coalition expresses concern that this winter will be no better than the previous one, as energy bills remain dangerously high. It’s important to note that the price cap only determines the maximum amount a supplier can charge per unit of energy based on the annual consumption of a typical home. The actual dual-fuel bill for a household will depend on their specific gas and electricity usage.
Under the new price cap, Cornwall Insight predicts that the unit price for electricity will decrease from 30p per kilowatt hour to 26.96p/kWh, while the unit price for gas will drop from 8p/kWh to 6.93p/kWh.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
