Ofgem, which regulates the UK energy market, has announced the energy price cap for the first three months of next year, with it rising by £94 from £1,834 to £1,928. Ofgem admitted that the 5% rise would be worrying for households at a challenging time, but said it was necessary due to suppliers having to pay increased wholesale costs.
The energy price cap is based on what Ofgem regards as typical usage for a dual-fuel household rather than being an absolute cap on total yearly costs, so households that use more energy typically pay more. The unit costs for energy will be capped at 7p per KWh for gas and 29p per KWh for electricity. While the rise will certainly not be welcome news, the situation is considerably better than the same period last year, when the UK Government stepped in to subsidise energy costs.
Cornwall Insight’s Dr Craig Lowrey, the energy analyst’s principal consultant, said that with households going into the winter months amid a rising cost of living, higher energy bills is the last thing they need, adding:
“However, as is often the case in the energy market, new challenges have arisen, and our reliance on foreign energy has once again left the UK vulnerable to price increases caused by events around the globe.”
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