**Winter Energy Prices Expected to Rise to Three-Year High**
Energy bills for millions of households in the UK are projected to increase this winter, reaching the highest levels seen in three years. This anticipated rise is linked to a new price cap set to be announced by the industry regulator, Ofgem, on Wednesday. The cap will reflect the recent increases in wholesale gas costs, which suppliers are currently facing.
As the colder months approach, the price cap is expected to rise by approximately 4% compared to the current cap, which will affect households on variable tariffs across England, Scotland, and Wales. This change is particularly concerning as it coincides with the onset of winter weather, beginning in October and lasting until the end of December.
According to analysts, the average price of gas has surged by 61% over the past three months when compared to late 2022. This volatility in international wholesale gas prices has prompted many households to switch to fixed energy tariffs, providing some stability against fluctuating costs. Approximately 40% of billpayers are currently on fixed tariffs, meaning their prices will remain unchanged until the end of their contract term.
The energy price cap, which sets a maximum price per unit of gas and electricity, does not determine the total bill amount, as a household's final costs depend on their energy consumption. In July, Ofgem adjusted its estimate of what constitutes a "typical" level of energy use, reflecting a decrease in consumption due to high prices and improved energy efficiency in many homes. The new typical usage estimate is set at 9,500 kWh of gas and 2,500 kWh of electricity annually.
Consultancy firm Cornwall Insight has projected that households using a typical amount of energy and paying via direct debit could see their annual bills rise to £1,729 starting in October, up from £1,663 between July and September. This increase marks the highest energy bill level recorded in three years.
The ongoing energy crisis, exacerbated by geopolitical tensions such as the war in Ukraine, has resulted in households paying hundreds of pounds more per year compared to pre-crisis norms. Industry data indicates that energy bills have increased by approximately 70% since the onset of the crisis in 2022. Consequently, unpaid energy bills have surged, with Energy UK estimating that total energy debt has risen to £6 billion, with predictions it could reach £7 billion by the end of the year. The average billpayer in debt, without a payment plan, reportedly owes around £3,500.
In light of these rising costs, Energy UK has called for the introduction of a flexible discounted tariff aimed at supporting those most in need, with funding suggested to come from taxation. This proposal has gained support from various debt charities, highlighting the urgent need for intervention. Emily Whitford, a senior public policy advocate at StepChange, emphasized the importance of implementing a national social tariff and a debt write-off scheme from Ofgem to prevent further increases in energy debt.
The Trades Union Congress has also advocated for a windfall tax on bank profits to help alleviate energy costs for consumers. In response to the rising bills, the government has announced a cut in VAT on electricity bills, effective from October, which is expected to reduce a typical annual bill by approximately £50. Additionally, some policy costs were either canceled or shifted in April, but government officials acknowledge that further measures are necessary to support households.
Energy suppliers are offering various support schemes for those struggling to pay their bills. Energy UK has compiled a list of these programs, but it is essential for individuals to reach out to their suppliers to discuss their financial difficulties and explore available assistance options.
As winter approaches, the combination of rising energy prices and the potential for increased energy debt raises significant concerns for many households across the UK. With the price cap changes looming, consumers are urged to stay informed and seek support if they find themselves struggling with their energy bills.