Energy bills to rise to highest level in three years leaving households facing ‘brutal winter’

Energy bills will rise by more than £60 a year this winter as campaigners warn millions of households face being forced to choose between ‘heating and eating’.

Regulator Ofgem announced a 4% rise to its energy price cap on Wednesday (26 August). This will set the amount that a typical household can expect to pay between October and December.

The unit rate for electricity will rise from 26.11p a kilowatt hour to 26.32p, while gas charges will rise from 7.33p to 7.97p. The amount on your bill will depend on energy use use – but if this rate was stable across the year, the typical annual bill for households paying via direct debit would be £1,723.

That’s £60 higher than the annual bill estimated in May, when a 13% spike pushed energy bills up. Overall, it’s the highest estimated annual bill in three years.

Ofgem attributed the surge to continued volatility in the Middle East. The fallout from the closure of the Strait of Hormuz has pushed up food and fuel prices nationwide.

Read more:

• What will the Middle East conflict mean for UK energy bills?
• What happens if you ignore your bills or can’t afford to pay? Here’s how to get help
• Energy bills to rise as millions struggle with cost of living: ‘People are already rationing’
  

“High international gas prices are continuing to drive energy costs in the UK,” said Neil Kenward, Ofgem’s director general for markets.

“We welcome the government’s intervention to remove VAT from electricity bills, without which customers would have faced even higher costs this winter.”

The government’s VAT plan will shave around £45 off the average bill – but prices are still prohibitively high for many, said Simon Francis, coordinator of the End Fuel Poverty Coalition.

“The Ofgem price cap may limit the unit rates and standing charges that consumers pay, but sadly it doesn’t cap the number of people suffering due to rising energy costs,” he warned.

“Price rises fall hardest on the households who can least afford them, with millions forced to pay more for the same energy or ration the energy they use even further.”

Some 22 million UK households will be impacted by rising bills. About a third of households buy their energy via fixed rate deals; they will not be affected by the increased energy cap. But most will – and around five million households in the UK spend more than 20% of their income on energy.

Campaigners have urged the government to finance cost of living measures helping this group by implementing a windfall tax on energy company profits.

“A handful of energy firms are banking more than £6 billion in UK profits this year alone,” Francis added. “Billpayers are being asked to pay more, while billionaires count the difference.”

Prime minister Andy Burnham said following Ofgem’s announcement: “It’s difficult for people and I recognise that.”

“But it’s why, within days of taking office, I announced that we would remove VAT off electricity bills to give people that little bit of help.

“That kicks in from October. We know the price cap will have an impact, but it is what we can do right now.”

He added that the government would “continue to look” at how it could bring energy prices down in the long term.

It’s an urgent question for millions of people, said Jonathan Bean from Fuel Poverty Action.

“We work with people who are choosing between heating their homes and feeding themselves or their children,” he said.

“This winter is set to be even more brutal, so Burnham must act urgently to guarantee everyone the essential energy they need to stay warm and safe.”

According to previous research from the End Fuel Poverty Coalition, around one-in-10Brits has skipped a hot meal to save on energy costs.

Are you struggling to pay your energy bills? Here’s Big Issue’s guide on how to get support.

Do you have a story to tell or opinions to share about this? Get in touch and tell us more. 

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