What help is Sunak offering as households face energy bill hikes?
Millions of households face a 54% energy bill hike from 1 April after the regulator Ofgem lifted the cap on default tariffs to the equivalent of just under £2,000 a year for an average user.
The price cap is a limit on a unit of gas and electricity – it’s not a cap on customers’ overall energy bills, which will still rise or fall in line with their energy use.
Under the new Ofgem cap, the average dual-fuel bill for a direct debit customer will go up by £693 a year, from its current level of £1,277. This will affect 22 million households.
The news is even worse for people who pay via other methods. About 4.5 million households use a prepayment meter, and they face a typical hike of £708 – from £1,309 to £2,017. Meanwhile, those customers who pay for their energy with cash or by cheque face an average bill of £2,101 for their gas and electricity.
From 1 April a typical customer paying by direct debit will be charged 28p a kilowatt-hour for electricity and 7p a kWh for gas. This is about double the unit prices being charged by the cheapest providers at the start of 2021.
For anyone with above-average energy use – for example, large families or older people in draughty homes – their annual bill could be much higher than the headlines suggest.
The government said all households will receive £200 off their energy bills, and will then pay this “loan” back at a rate of £40 a year over five yearsfrom 2023.
But the bad news is that this help does not arrive until the autumn, when energy bills may be even higher. That is because Ofgem is due to update – and almost certainly push up – the price cap when it makes its next announcement in August. If it does, bills will rise in October, just as the repayable discount is due.
The energy bills
Read more on theguardian.com
