UK Energy Prices on the Rise. Again
Millions of UK households are set to experience higher energy bills this winter, surpassing last year’s costs, despite a decrease in the energy price cap, according to findings by a thinktank.
The Resolution Foundation has indicated that approximately one in three English households will face an increase in their winter energy expenses due to terminated energy support initiatives and a rise in the daily standing charge. This comes even as the energy regulator, Ofgem, is expected to announce another reduction in the cap that restricts how much energy companies can charge per unit of power.
In recent years, the fixed fee paid by customers to maintain their homes’ connection to the grid has escalated due to the collapse of various energy suppliers, including Bulb. This daily standing charge covers the costs incurred from supplier failures.
Consequently, around 35% of English households, equivalent to 7.2 million residences, are projected to encounter higher energy bills this winter compared to the previous year. The impact is most pronounced among the poorest tenth of households in England, where nearly half (47%) will grapple with heightened expenses.
Despite the decreasing cost per energy unit, this decline will be negated by the upsurge in the daily standing charge and the termination of the government’s universal £400 energy bill support initiative.
Those who will benefit are households with the highest energy consumption. In contrast, households that utilize relatively small amounts of energy are poised to face escalated bills relative to the previous winter.
Homes consuming less than 79% of the average gas and electricity consumption will witness augmented charges during the winter months, according to the Resolution Foundation. This category encompasses over a third (35%) of English households, with the figures escalating to nearly half (47%) within the poorest tenth of households in England.
The additional expenses are expected to be substantial, impacting around one in eight homes (equivalent to 2.7 million households) with winter energy bills surging by £100 or more. This proportion rises to almost a quarter (24%) within the poorest tenth of families.
The data underscores that the cost of living crisis persists, particularly when combined with the trajectory of escalating food prices and housing expenditures, noted Jonathan Marshall, the senior economist at the Resolution Foundation.
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