British households are facing a 5% increase on their energy bills from January, when the regulator is set to raise its price cap.
Ofgem’s price cap is expected to rise to an annualized rate of £1,931 ($2,395), according to the final forecast for the first quarter by consultancy Cornwall Insight. That’s near to the £1,928 level that Investec Plc analyst Martin Young predicted in a note on Wednesday.
Prices are much lower than the peaks seen during the height of Europe’s energy crisis — when the government stepped in to subsidize bills — but remain well above historic levels, keeping a strain on consumers hit by a cost-of-living crisis. The forecasts follow data on Wednesday that showed UK inflation at a two-year low, prompting Prime Minister Rishi Sunak to declare victory in his battle to tackle price pressures.
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The Ofgem price cap, which represents an annual bill for a typical household, is largely a reflection of wholesale power and gas prices, which are still high compared with pre-crisis levels.
The regulator is also exploring reforming the so-called “standing charge,” a daily charge that’s controversial because it’s levied on consumers regardless of their consumption. The regulator is inviting input from suppliers and consumer groups, it said on Thursday.
