Energy bills have been forecast to almost double in January according to new data.
Households across Scotland and the UK have been struck by soaring energy bills amid the worsening cost of living crisis. However, costs are now set to rise even further.
Energy bills for the majority of homes across the country are limited by a price cap that is set by regulator Ofgem. This price cap increased on April 1 from £1,277 to £1,971.
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The cap will be reviewed again in October, and another significant rise is projected. As reported by The Mirror, Ofgem chief executive Jonathan Brearley stated that the new cap will be "in the region of £2,800".
However, energy experts predicted it will be even higher. Now, consultants have forecast that prices could reach as high as £3,420 in October and then £3,850 when the cap is next reviewed in January.
Looking back to July 2021, the price cap was only £1,138 a year, with many deals being even cheaper. Speaking to The Sun, senior manager at BFY Group Adam Jones said: “This is off the back of gas and power prices rising to all time highs.
"The winter 2022 gas price has risen nearly 10-fold since this time last year, and more than double the price of last winter’s gas. Official figures have an average income of £31,000, this means more than half the country could be pushed into fuel poverty.”
Head of policy at Uswitch.com Justina Miltienyte commented: “As we get closer to the announcement of the next price cap, the predictions keep rising higher and are now becoming impossible for policymakers to ignore. Predictions of January’s price cap hitting £3,850 - nearly doubling in just 12 months - will be deeply distressing to every energy bill-payer. It is also well above the prediction of £2,800 that the Government based its original support package on."
What is the Ofgem energy price cap?
The energy price cap refers to the maximum amount energy companies can charge customers for gas and electricity. It is reviewed twice per year.
Currently, the cap is adjusted every April and October, but Ofgem has indicated that this may be changed to one every three months — meaning the next review will be in January.
The regulator launched the cap in 2019, and it is determined by a range of factors — including the wholesale cost of power the six months prior.
Will my energy bills go up?
Those that are on the price cap are default tariff customers who are on a standard variable rate (SVR) tariff because they have not switched to a fixed deal. This is also applicable to households that stick with their new supplier after their previous supplier exited the market , with around 30 energy providers going under since 2021.
If you are on an SVR tariff, then you will see your bills go up in line with the price cap.
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