Energy price cap: The staggering amount energy bills have risen
Martin Lewis warns of 'damaging' energy price cap rise
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Energy bills are likely to become unmanageable for some households across the UK as the soaring price of wholesale gas knocks several suppliers under. With the expected rise of the energy price cap early next year to “inevitably reflect” rising costs, according to Ofgem chair Johnathan Brearley, many could see the cost of heating their homes soar to unprecedented levels.
Energy regulator Ofgem acknowledged in a statement that it was a “worrying time for many people”:
“The energy price cap covers around 15 million households and will ensure that consumers don’t pay more than is absolutely necessary this winter.
“However if global gas prices remain high, then when we update the price cap unfortunately the level would increase.
“Any customer worried about paying their energy bill should contact their supplier to access the range of support available.”
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How much are energy bills currently?
Data published by Ofgem shows that in September 2021 the average UK energy bill was £95 per month, or £1,138 a year – but the amount you pay depends on what size home you live in.
For example, Ofgem says the average price of energy for a small flat is £66 a month.
The current energy price cap is set at £1,277 a year – the highest the cap has ever been.
How much have prices risen?
The price cap is reviewed twice a year in February and August and takes effect on October 1 and April 1 respectively.
The first energy price cap was created in September 2018 at an initial price of £1,136.
The cap didn’t actually come into force until January 1, 2019, by which time the rate had been increased by a pound to £1,137.
After its first review, it was announced in February 2019 that the cap would be raised to £1,254 – an increase of £117.
The price cap level was next reviewed in August 2019, when the rate was reduced by £75 to £1,179, as a result of falling wholesale costs across the continent.
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In its February 2020 review, the cap was reduced again, this time by £17 to £1,162.
But by April 1, 2020, the new rate came into force, meaning the level had changed to £1,126 due to a change in the way Ofgem calculates average usage.
The next review in In August 2020 set the price at £1,042.
In February 2021, the cap level was increased by nine percent to £1,138, which came into effect from April 2021.
Now, the price has jumped to £1,277 – an increase of £139, the biggest jump since the cap was first set.
Will prices continue to rise?
Research firm Cornwall Insight is forecasting the energy price cap, set at a record £1,277 a year from October 1, is going to have to be significantly boosted in spring 2022 as the energy crisis continues.
Cornwall has forecast Ofgem could put the price cap up by as much as 30 percent, or £1,660.
Craig Lowrey, a senior consultant at Cornwall Insight, said: “With wholesale gas and electricity prices continuing to reach new records, successive supplier exits during September and a new level for the default tariff cap, the Great British energy market remains on the edge for fresh volatility and further consolidation.”
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