Ofgem, the UK’s energy regulator announced in November that the Energy Price Cap will increase in January 2023. Consumers deserve to know what this means for them, so keep reading to find out if and how the January price cap may impact you.
What is the energy price cap?
The energy price cap limits the unit price that energy companies are allowed to charge consumers in the uk. The price cap is controlled by Ofgem. This system has been in force since 2019 to try and stop consumers from paying too much for energy.
Are energy prices rising due to the January price cap?
The short answer to the above question is yes. Ofgem shared that the energy price cap will rise to £4,279 from January 1st to 31st March 2023. The current price cap is £3,549 so this will be a 20% increase.
The £4,279 figure is an indication of how much annual energy costs would be for an average household with typical levels of energy consumption.
How will it impact consumers?
The news of the price cap rising again in January is likely to make alarm bells ring for consumers across the country. After all, energy prices significantly increased in October this year.
However, there is some good news for bill payers during the first quarter of 2023. Thanks to the Energy Price Guarantee from the government, annual energy costs are fixed to £2,500 on average per household, per year. The price guarantee at this price is fixed until the end of March 2023.
Therefore, consumers are unlikely to see their prices rise further from January to March unless they up their energy usage.
What will happen to energy prices after March?
As it stands, energy prices will rise again for consumers from April 2023. This is because the government is upping its energy price guarantee from then. With the new guarantee, households will spend an average of £3,000 per year on energy bills.
Unfortunately, this is not the only reason Brits may feel the pinch when it comes to their energy bills in 2023. This is because the Energy Bills Support Scheme, which meant all UK households could access a £400 discount on their energy bills this winter, is set to be scrapped in 2023. Therefore energy bills could on average be costing an extra £900 per year.
This begs a very important question which is:
What can you do to keep your energy costs down?
Although energy costs are high, and set to rise further, there are actions you can take to ensure you’re not paying over the odds. Firstly, you should try improving the energy efficiency of your home, perhaps by installing the solar panels north east homeowners are using or by getting your home insulated if it isn’t already.
It is also worth cutting any excess energy consumption such as leaving lights and appliances on when not in use. If you are struggling to make energy payments, you should speak to your energy supplier as they may be able to offer support.