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Households in the UK could see their energy bills increase by 5% from January 2024 when the energy markets regulator Ofgem is expected to raise the so-called energy price cap, consultancy Cornwall Insight said in a forecast on Thursday.
The UK has a so-called Energy Price Cap in place, which protects households from high bills by capping the price that providers can pass on to them.
The cap was raised a few times last year after wholesale energy prices, especially the price of natural gas, surged in the spring and summer of 2022 following the Russian invasion of Ukraine and the energy crisis in Europe that followed. The high energy prices plunged millions of households into energy poverty last year.
This year, the cap has been lowered in two consecutive quarters, but it’s expected to be increased again for the January-March 2024 quarter when the winter will have set in.
According to analysts at Cornwall Insight, the price cap for Q1 2024 for a typical household who use gas and electricity and pay by Direct Debit would be $2,394 (£1,931) per year, or 5% higher than the current price cap of $2,279 (£1,834) per year for a typical consumer.
“Cornwall Insight is currently forecasting the cap will decline from the end of March 2024, although this remains subject to the ongoing volatility in the wholesale energy markets, however, it will continue to remain well above historic levels,” the consultancy said.
Ofgem is set to announce the energy price cap for January-March 2024 on November 23.
“An unstable wholesale energy market, coupled with the UK’s reliance on energy imports, makes it inevitable that energy bills will rise from current levels,” said Dr Craig Lowrey, Principal Consultant at Cornwall Insight.
“This leaves households facing yet another winter with bills hundreds of pounds higher than pre-pandemic levels, and affordable fixed deals few and far between.”
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com