23 August 2024 , 08:22
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Energy bills will go up by 10% in October, meaning 28.4million households will be paying about £149 more a year.
Ofgem, the energy regulator, determines how much utility companies can charge customers – the maximum suppliers can charge is known as the energy cap.
The cap, expressed in terms of how much the average home would pay, has risen from £1,568 to £1,717, Ofgem announced today.
This cap will be in effect from October 1 to December 31 as Ofgem announces a new cap every three months.
Why are energy bills increasing?
One reason for the price increase, Ofgem says, is that the wholesale price of energy has risen.
Wholesale costs are paid by suppliers and have risen by about 20% in the last few months largely due to Russia’s invasion of Ukraine, according to experts.
To reflect that, wholesale costs will represent about 43% of a typical bill – from £613 last quarter to £736.
From 1 Oct 2024 Price Cap average direct debit unit rates for energy;
— Ofgem (@ofgem) August 23, 2024
ELECTRICITY
Unit rate: 24.50p per kWh
Standing charge: 60.99p per day
GAS
Unit rate: 6.24p per kWh
Standing charge: 31.66p per day https://t.co/lSqVKwnSeS pic.twitter.com/xCZd9cyFJX
Ofgem officials whip out their calculators every few months to ensure people pay a ‘fair price and to protect against overcharging’.
But campaigners worry that, amid a years-long cost of living crisis, seeing yet more of their bills going up is not the news people wanted to read about this morning.
This price hike is yet another blow to the 6,500,000 in fuel poverty who, like every other bill payer in the UK, are still forking out 65% more than they did for their energy than at the start of the crisis,’ said Fiona Waters of the anti-poverty charity Warm This Winter.
‘Meanwhile, energy companies have been profiteering, making more than £470,000,000,000 since 2020. That shows there is money in the system but that is going to energy bosses and their shareholders when it needs to go to ordinary people.
‘Today just highlights the Government’s policies on renewables and energy efficiency are needed to mend this broken system but we also need help now to get everyone of all ages through the winter ahead.’
What is the energy price cap?
Although it’s called a ‘price cap’ this isn’t a cap on how much your bills will be.
Most homes won’t pay bang-on £1,717 a year as the figure is based on average energy use.
Bills can very much exceed or fall well below this estimate and vary depending on energy use, location and the type of metre someone has.
Ofgem (Office of Gas and Electrical Markets) does the maths to figure out what energy suppliers can charge people.
This includes setting the price per unit of electricity and natural gas and slipping other charges into the bill like operating costs, maintenance fees and subsidies for clean energy.
From October 1, the unit rate for electricity will be 24.50p per kilowatt-hour, for a standing charge of 60.99p per day – this is the fixed daily fee you pay, even if you use no electricity.
Gas, meanwhile, clocks in at 6.24kWh and now has a standing charge of 31.66p per day.