Millions of households in the UK will see their energy bills soar by an average of £94 per year from today, as the regulator Ofgem raises its price cap by 5% in response to rising wholesale costs.
The price cap, which sets a limit on the maximum amount suppliers can charge customers on standard variable tariffs, will increase from £1,834 to £1,928 per year for a typical dual-fuel household.
The increase, which affects about 11 million households, is driven by the instability and conflict in the international energy market, especially in Ukraine, where Russia has amassed troops near the border and threatened to cut off gas supplies to Europe.
Households are urged to submit meter readings to their supplier as soon as possible to ensure they are charged correctly and avoid any unexpected bills.
Ofgem acknowledged that the increase will be worrying for many people who are having a difficult time and expects suppliers to offer help to those who are struggling with bills, such as payment plans, debt advice and access to hardship funds.
The regulator also unveiled plans to lift the price cap by another £16 from April 2024 to March 2025, to help suppliers recover nearly £3 billion in debts from customers who cannot pay. This will bring the total increase in the price cap to £110, or 6%, in the next three months.
The price cap is revised every six months, and analysts predict another huge rise in October 2024, which could push the average bill up to £2,600, double that of the previous winter. The price cap is expected to fall back to the current level in summer 2025, but longer-term forecasts are uncertain.
The price hike comes amid a cost-of-living crisis, with inflation hitting 30-year highs and other bills such as council tax, water bills and car tax also going up for some on April 1, 2024.
The government has not announced any further help for households to offset the energy bills, apart from some financial support such as the warm home discount, which gives eligible customers a £140 rebate, and the winter fuel payment, which gives pensioners between £100 and £300 depending on their circumstances.
Citizens Advice said it was helping record numbers of households with energy debt and seeing more people than ever who cannot afford to top up their prepayment meter, which can lead to them being cut off from heating and lighting.
The End Fuel Poverty Coalition, a group of charities and campaigners, said struggling households are facing an assault from all sides and called on Ofgem to abolish the January price hike, saying it will push more people into poverty and worsen health and social inequalities.
The Bank of England governor, Andrew Bailey, said the country is facing the biggest single shock from energy prices since the 1970s and warned of the risk of a wage-price spiral, where higher inflation leads to higher wage demands, which in turn fuels more inflation.
The Independent reported that some households are resorting to growing their own vegetables, skipping meals and reducing car journeys to cope with the rising cost of living. The BBC offered some money saving tips such as switching suppliers, checking eligibility for grants, using energy-efficient appliances and reducing consumption.
