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Energy prices expected to rise ahead of winter Energy price cap: Gas and electricity prices to rise by 2% in October
(about 8 hours later)
Energy prices will be set for millions of households for this autumn and winter, when regulator Ofgem announces its latest price cap later. Gas and electricity prices will rise by 2% for millions of households under the latest cap announced by energy regulator Ofgem.
Analysts expect a slight rise in gas and electricity prices between October and December, despite having previously predicted a small fall. The increase, which is slightly more than analysts expected, means a household using a typical amount of energy will pay £1,755 a year, up £35 a year on the current cap.
A price rise of about 1% a year is likely, which campaigners say will mean another winter of relatively high energy bills. The increase will kick in at the start of October, which campaigners say will mean another winter of relatively high energy bills.
Ofgem's price cap sets the maximum that can be charged for each unit of gas and electricity for about 21 million households in England, Scotland and Wales. Ofgem's cap sets the maximum price that can be charged for each unit of gas and electricity for millions of households in England, Scotland and Wales.
The cap sets the price for each unit, but not the total bill which depends on how much energy you use. Individual households can calculate their estimated specific change by adding £2 onto every £100 they spend at the moment on energy each year.
It will be set at 07:00 BST, with the change coming into force at the start of October and lasting for three months. The increase comes as families are also facing rises in other basic costs. The British Retail Consortium said that food costs were rising at their fastest rate since the February of last year, with the price of chocolate, butter and eggs soaring.
Support for vulnerable households The energy cap sets the maximum price for each unit, but not the total bill which depends on how much energy you use.
Experts at energy consultancy Cornwall Insight predicted the typical household energy bill will rise by £17 to £1,737 per year when the new price cap comes into force. The change comes into force at the start of October and lasts for three months.
This relates to a home using a typical amount of energy. There is forecast to be a 1% annual rise in energy prices, so individual households can calculate their estimated specific change by adding £1 onto every £100 they spend on energy each year. Ofgem changes the cap, largely based on the cost of energy on wholesale markets.
Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets. However, the rise in bills this time is partly the result of the higher cost of transporting energy and extra support measures for consumers, previously announced by the government and in place this winter.
However, the predicted rise in bills this time is partly the result of extra support measures, previously announced by the government and in place this winter.
Anyone on means-tested benefits will automatically receive the £150 Warm Home Discount on their bills. Some previously did not qualify owing to the size of their property, but that condition will be scrapped.Anyone on means-tested benefits will automatically receive the £150 Warm Home Discount on their bills. Some previously did not qualify owing to the size of their property, but that condition will be scrapped.
All billpayers will chip in to fund this extra support, which is on top of the government's U-turn on winter fuel payments. All billpayers will chip in to fund this extra support, mainly through higher standing charges - the fixed cost of connecting to the supply. It means standing charges will typically rise by 4% for electricity and 14% for gas.
Elisha says bills are a worry 'Healthier market'
Campaigners say many households are still struggling to pay bills, as well as repay energy debt that built up during a period of high prices.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said this would mean another winter of high prices.
"The average family still paying hundreds of pounds more than they did just a few years ago," he said.
Families enjoying chips at New Brighton, Merseyside, may have been making the most of the sunshine, but the cost of living still looms large.
"At the moment, it's been ok, but I think the winter might be a different story," said Elisha, who has an 11-week-old baby, Theo.
The consumer group Which? said it could be a good time to shop around for a fixed-price deal, but billpayers should be alert to exit fees.The consumer group Which? said it could be a good time to shop around for a fixed-price deal, but billpayers should be alert to exit fees.
"Some contracts charge large fees to leave early, which would cancel out any savings," said Emily Seymour, from Which?."Some contracts charge large fees to leave early, which would cancel out any savings," said Emily Seymour, from Which?.
A Department for Energy Security and Net Zero spokeswoman said: "The only way to bring down energy bills for good is with the government's clean energy superpower mission, which will get the UK off the rollercoaster of fossil fuel prices and on to clean, homegrown power that we control. Ofgem said that more than a third of billpayers were now on fixed deals, where the price of each unit is fixed for a year and unaffected by the price cap.
"We are taking urgent action to support families this winter - in addition to expanding the £150 Warm Home Discount to 2.7 million more households, we are strengthening customer protections, including by giving people quicker and easier access to automatic compensation when their suppliers let them down." Tim Jarvis, director general of markets at the energy regulator, said this was a sign of a "healthier market".
He accepted that people would still feel the impact of a price rise, but added some could do things to save themselves money, such as paying via direct debit each month rather than receiving a bill every three months - called standard credit.
Around 20 million households pay by direct debit, with eight million on standard credit, and six million on prepayment meters.
Campaigners say many households are still struggling to pay bills, as well as repay £4bn of energy debt that built up during a period of high prices.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said this would mean another winter of high prices.
"The average family still paying hundreds of pounds more than they did just a few years ago," he said.
The government, which earlier this year made a U-turn on winter fuel payments, said it was determined to help vulnerable families by expanding the Warm Home Discount.
Energy minister Michael Shanks said the government wanted more clean energy produced domestically to bring down prices.
Energy UK, which represents suppliers, said the Warm Home Discount expansion should only be a temporary measure and targeting those most in need was a better long-term requirement.
Liberal Democrat leader Ed Davey said "the last thing" families and pensioners needed was higher energy bills this winter.