Energy Prices Rise Again, Putting Pressure on Households
The energy regulator Ofgem has announced another price rise in January, with typical household bills increasing to £1,738 annually – over 50% higher than pre-Covid levels. This increase means an additional £21 per year for households paying by direct debit, affecting 26 million homes in England, Wales, and Scotland.
While the price cap is now 10% lower than last year, many households continue to struggle with high energy costs. Ofgem encourages customers to shop around, noting more tariffs and fixed-price options are now available. Some customers could save up to £100 annually by switching to direct debit payment methods.
The ongoing high energy prices have created significant challenges for households. Charities warn that many people are facing impossible choices, with some rationing energy use or avoiding heating during cold periods. Analysts from Cornwall Insight suggest these high prices may become “the new normal.”
The financial strain is evident in mounting energy debt. Households have collectively accumulated £3.7 billion in energy supplier debt, with the average household owing over £1,500 for electricity and £1,300 for gas. One Liverpool resident, Angela, shared her struggle, revealing she’s over £1,000 in arrears and avoids using gas and electricity.
The price cap details reveal:
– Gas prices are capped at 6.34p per kilowatt hour (up from 6.24p)
– Electricity prices are at 24.86p per kilowatt hour (up from 24.5p)
– Pre-payment meter users face a slightly lower typical bill of £1,690
– Quarterly cash or cheque payments result in higher bills of £1,851
The situation has prompted political debate, with Energy Secretary Ed Miliband acknowledging the price rise would “concern” many families. Liberal Democrat leader Ed Davey has called for reinstating winter fuel payments to all pensioners.
Support for vulnerable households is changing. The final cost-of-living payment was made in February, and winter fuel payments are now restricted to low-income pensioners receiving certain benefits. The government estimates this could push an additional 50,000 pensioners into relative poverty.
For those struggling, several resources are available:
– Pension credit can provide up to £3,900 annually
– Online calculators can help check benefit eligibility
– Support organizations like MoneyHelper offer guidance
– Phone lines and websites provide additional assistance
Energy companies have implemented support measures, including emergency credit, hardship funds, and debt forgiveness. However, the ongoing high prices continue to put significant pressure on households, particularly those with limited financial resources.
Ofgem’s Tim Jarvis acknowledges the ongoing challenge, urging customers to explore all available options to manage their energy costs.
