The power regulator Ofgem has mentioned its worth cap will attain £4,279 from January – however households shall be shielded by the federal government’s emergency intervention to maintain a lid on payments.
Ofgem mentioned the cap, which is adjusted each quarter, will improve by £730 for the three months from the beginning of subsequent yr. Nonetheless, the federal government’s power worth assure (EPG) will restrict typical family payments to £2,500. Analysts had anticipated the cap to sit down at about £4,200.
Ofgem mentioned: “There is no such thing as a quick motion for customers to take because of right now’s announcement.”
The chancellor, Jeremy Hunt, mentioned in final week’s autumn assertion that the EPG shall be lifted to £3,000 for a typical family from April.
Common family payments had been restricted to £1,277 a yr in the past, underneath Ofgem’s worth cap. That had been on account of rise to £3,549 from October.
Nonetheless, the previous prime minister Liz Truss intervened to introduce the EPG for 2 years. Hunt later truncated this to 6 months, earlier than then extending it by 12 months from April.
The EPG reduces the significance of the Ofgem worth cap for households however it’s used to calculate the distinction between the cap and the wholesale worth of power. The federal government supplies power suppliers with the distinction between the unit price underneath the EPG, and what they might have charged their clients had been it not in place.
The consultancy Cornwall Perception has predicted the EPG will value the federal government £42bn in its entirety. It expects the Ofgem cap to cut back to £3,921 from April after which to about £3,400 for the final six months of 2023.
Ofgem has modified the frequency of modifications to the cap from each six months to quarterly to reply extra shortly to actions in power markets.
The Treasury mentioned final week that £1.8bn was paid out in October by the power payments assist scheme, lowering prices for greater than 27m households. It mentioned £136m price of vouchers had been supplied to conventional prepayment meter clients.
The federal government hopes to fund a number of the value of the scheme by windfall taxes on oil and fuel and electrical energy technology corporations.
The delicate begin to winter, and an easing within the worth of wholesale fuel, could have helped scale back the price of the coverage to the taxpayer.
Nonetheless, there are considerations that payments will stay excessive subsequent yr as international locations battle to switch provides of Russian fuel, which have been reduce since its invasion of Ukraine.
The Division for Enterprise, Vitality and Industrial Technique mentioned: “The power worth assure is defending customers from hovering power prices, which means individuals’s payments is not going to rise in keeping with right now’s Ofgem power worth cap improve.”
Gillian Cooper, the pinnacle of power coverage for Residents Recommendation, mentioned: “The excellent news is your power invoice gained’t rise right now due to the worth cap announcement.
“Even with a worth freeze in place, our advisers are seeing report numbers unable to high up their prepayment meters and bracing for a chilly and bleak winter forward … The federal government should take a look at what additional assist is required this winter.”
Peter Smith, the director of coverage and advocacy at Nationwide Vitality Motion, mentioned: “The power worth assure solely limits the unit price households pay and never standing costs which might nonetheless massively range relying on the place you reside throughout Nice Britain.
“These have been rising in recent times and the way a lot Ofgem enable corporations to move by to clients by these mounted costs could have a huge impact, particularly for households who must pay by prepayment or extra usually, relying on the way you pay in your payments.”
Individually, ministers are planning to launch a £25m public data marketing campaign earlier than Christmas to encourage individuals to save cash and power.
The marketing campaign will advise eight modifications to chop payments together with lowering the temperature of boilers, turning off radiators in empty rooms and switching off electrical units quite than leaving them on standby, The Occasions reported. The measures might save households as much as £420 a yr.
Truss blocked a public data marketing campaign, arguing it might be seen as “nannying” Britons.