Energy regulator Ofgem revealed their new price cap, which will come into force on January 1, and it shows that bills for the average household are set to increase.
The price cap will rise from £1,834 per year to £1,928 a year from the new year.
The increase has been driven almost entirely by rising costs in the international wholesale energy market due to market instability and global events, particularly the conflict in Ukraine.
The cap does not set the maximum a household will pay for their energy but limits the amount providers can charge them per unit of gas or electricity, so those who use more energy will pay more.
The £1,928 figure is based on Ofgem’s estimate of what an average household would use over a year.
Ofgem chief executive Jonathan Brearley said: “This is a difficult time for many people, and any increase in bills will be worrying.
“But this rise – around the levels we saw in August – is a result of the wholesale cost of gas and electricity rising, which needs to be reflected in the price that we all pay.
“It is important that customers are supported and we have made clear to suppliers that we expect them to identify and offer help to those who are struggling with bills.
“We are also seeing the return of choice to the market, which is a positive sign and customers could benefit from shopping around, with a range of tariffs now available offering the security of a fixed rate or a more flexible deal that tracks below the price cap.
“People should weigh up all the information, seek independent advice from trusted sources and consider what is most important for them, whether that’s the lowest price or the security of a fixed deal.”
Are you paying too much for your energy?
Money Saving Expert Martin Lewis has previously revealed how customers who pay for their energy by direct debit could save as much as £200.
Speaking on ITV’s The Martin Lewis Money Show, he explained it was crucial for everyone to check how much they should be charged.
Firstly, he recommended all viewers send regular meter readings. This will help energy providers charge you the correct amount for the energy you are using, and prevent them from estimating your bill, which can lead to you being overcharged.
If you think you are being overcharged based on providing regular meter readings then you can use an online direct debit calculator. This will work out how much you should be charged based on your usage.
Martin Lewis said calculator results had been “very powerful” in getting energy providers to reduce your direct debit charges, and he recommended calling them up with your results.
Lastly, if you still think you are overpaying, you can request to be moved on to a variable direct debit where you will only pay exactly what you have used.
However, this means your bills will be much higher in the winter, when you will not have the “smoothing effect” of having paid more in the summer while using less energy.
The Money Saving Expert also warned that paying when you receive your monthly bill could be up to 10 per cent more expensive than regular direct debit payments.
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