Energy prices: Experts predict how much your bills will rise

Energy crisis: Woman has to starve in order to stay warm

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The dreaded change to the energy price cap will be announced on Thursday and will see millions of households have their energy bills hiked by hundreds of pounds a year. The unexpected decision to bring forward the energy price cap announcement comes as it emerges the government is looking at underwriting loans to energy suppliers in order to protect households from sky-high bills.

The Government has been heavily criticised for failing to act decisively in the face of millions of households faced with unaffordable bills.

It is now understood there are plans for Government-backed loans for suppliers, so the burden of paying for the rise can be spread to consumers over a longer period.

The huge spike in the wholesale cost of gas has caused more than 25 energy suppliers in the UK to go under over winter.

While the announcement will now take place tomorrow, it will not come into force until April 1 this year – the same month National Insurance will rise by 1.25 percent for UK workers.

READ MORE: ‘Makes a massive difference to energy costs’: How to save £600 a year

What is the energy price cap?

Ofgem calculates the energy price cap to protect consumers from unaffordable bills.

The cap limits the amount a supplier can charge for their standard tariffs, covering both standing charges and kWh for electricity and gas.

At present, the cap set by OFGEM is £1,277 per year, but will rise considerably this April if the experts are correct.

How much will the energy price cap rise?

Les Roberts, Content Manager at Bionic told “At the last price cap review, there were around 11 million UK households affected by the price rise.

“The figure is likely to be much higher this time around as more people will have rolled onto their supplier’s SVT to take advantage of the price protection offered by the cap.

“Experts are estimating an increase of around 50 percent.

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“This means the average household on a standard variable rate tariff will see their annual bills increase by around £638 to £1,915 a year.

“This will be the price cap’s highest level – by some distance – since it was introduced in January 2019.

“It’s worth noting that the cap sets the prices that suppliers can charge for each unit of energy, but that does not mean there is a limit to how much people can pay.

“The figure of £1,277 is the average a household can expect to pay if they’re on their supplier’s standard variable rate tariff. “

Will high prices be here to stay?

Ed Whitworth, Head of Energy Performance at Bionic, the business comparison experts, told “Although it’s difficult to predict exactly what will happen in such a turbulent energy market, the chief executive of Centrica, the parent company of British Gas, has suggested there was “no reason” to expect gas prices would come down “any time soon”.

“He even suggested that “high gas prices will be here for the next 18 months to two years”.

“The government is coming under pressure to step in and help consumers by way of a VAT cut or a lowering of other charges not directly linked to the wholesale price of energy, but the only way to that business owners can currently shield themselves from out of contract rates and any potential future rises is to lock in existing rates as soon as possible.”

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