Average Annual Energy Costs in Great Britain Projected to Increase to £1,849 Starting in April

The average energy bill for homes in Great Britain is set to increase by £111 starting in April, bringing the annual cost for a typical household to £1,849. This change comes after the energy regulator announced its third consecutive increase in the price cap for gas and electricity. The rise of 6.4% is primarily due to higher wholesale prices and was larger than many experts anticipated.

In January, Ofgem, the energy regulator, had raised the cap by 1.2%, which meant that households on direct debits were paying a rate of £1,738 each year. This increase was influenced by lower gas supplies in Europe caused by a harsh winter, which pushed market prices up.

Advocates for consumers have expressed serious concerns about the new rise, calling it “unbearable” for many families who have been already struggling to cover their bills during the cold months. The latest increase indicates that average households are now paying about £600 more annually for their energy compared to before Russia’s invasion of Ukraine three years ago.

Around 9 million homes using variable tariffs will feel the immediate effects of the new price cap from April, while those on fixed tariffs will experience the changes later. It’s also important to note that households that consume more energy than the average might face even higher bills. This is because the price cap limits the cost per unit of gas and electricity but does not set a limit on the total bill.

From April, the cost of electricity will go up from 25p to 27p per kilowatt hour, with a standing charge dropping slightly to 54p from 61p. Meanwhile, gas prices will rise from 6.34p to 6.99p per kilowatt hour, with a slight increase in the standing charge from 31.65p to 32.67p.

Analysts from the energy consultancy Cornwall Insight had predicted earlier in the year that the cap would be set at £1,785 for April, but due to rising energy market prices, that number has exceeded expectations. Last week, they revised their forecast to show an increase of £85, bringing it to £1,823.

Ofgem stated that around 11 million households on fixed deals would not be affected by the cap increase. Jonathan Brearley, the chief executive of Ofgem, acknowledged that no one welcomes a price increase, especially since energy costs continue to be a significant burden for many families. He noted that the reliance on international gas markets leads to unpredictable wholesale prices, which results in higher bills. He emphasized the importance of investing in cleaner, localized energy sources to reduce this dependency.

The unexpected rise in the price cap is a setback for the government, which promised to lower energy bills by “up to £300 by 2030.” Cornwall Insight speculates that the cap could decrease slightly in summer but is expected to rise again in October, as colder weather typically leads to higher energy consumption.

Peter Smith from the National Energy Action charity expressed that even though this price hike happens in spring, it will not be comforting for those who faced high bills during the winter. He highlighted that many people are already dealing with unaffordable bills and significant debt related to their energy costs.

Dame Clare Moriarty, chief executive of Citizens Advice, raised concerns about families with children, noting that more than one-third of these households struggle to afford their bills, and this increases for those on lower incomes.

Craig Lowrey, a principal consultant at Cornwall Insight, commented that the energy market feels repetitive, with the cap rising for the third time amid international price volatility. He mentioned that many households are frustrated with what they perceive as the failure of government energy policies, although the reality is that reliance on foreign gas limits the immediate impact of any policy changes.