You are here: Home - Household Bills - News -

Energy bills could rocket further

0
Written by:
04/02/2022
Bill payers are already bracing themselves for the energy price hikes coming into effect from April. But today, a consultation has launched which could see bills rise further and faster.

Millions of customers are now worried about covering their bills after the energy price cap was raised by nearly £700, taking average annual default tariff bills close to the £2,000 mark.

While the energy price cap rise was expected, the energy regulator, Ofgem, has today published a consultation looking at whether changes to the methodology of the price cap are necessary.

It is proposing to review the energy price cap four times a year, rather than the current two.

Essentially, this could mean billpayers see higher energy prices in the coming months as Ofgem attempts to balance the unprecedented rise in wholesale market prices facing suppliers, with the need to ensure customers pay a fair price.

Equally, if wholesale costs were to come down, then bills could also be expected to fall at a quicker pace.

The document stated: “We are today launching a policy consultation on changes to be implemented by October 2022 to include a specific allowance for backwardation costs in excess of historical basis risks, a shortening of the implementation period to reduce volume risks and further consideration of the costs and benefits of a quarterly update and a price cap contract against a strengthened version of the existing six-monthly update.”

Mark Bennett, energy expert at energyhelpline.com: “Last year’s wholesale energy price crisis, which saw costs increase nearly ten-fold by December, really caught the industry unawares, resulting in 29 suppliers either going out of business or entering administration.

“Ofgem has reacted by making a series of changes to the price cap methodology, which means that from April and in times of significant upheaval, the price cap can be amended outside of the normal price cap cycle. In theory this would work both when wholesale prices are rapidly increasing, as well as when they are tumbling.

“Further to that, they are proposing to increase the frequency of the cap to four times a year, in order to better alignment to market changes, and will consult on that with the aim of having it in place by October.

“This should mean that consumers are less likely to feel steep rises in their energy prices like they will see in April, and benefit sooner when wholesale prices reduce.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week