Energy price cap to rise in January

British households face another increase in their energy bills in the new year as greater international competition for gas pushes up costs.
Ofgem is to expected to reveal on Friday that a typical household’s dual-fuel energy bill will rise by £19, or 1 per cent, to £1,736, according to the energy consultancy Cornwall Insight.
The cap increased last month to £1,717 a year for a typical consumer. That was the first time the energy watchdog had raised its price cap since January last year and was in response to a rebound in wholesale gas prices amid mounting global political turmoil.
Britain is in the midst of a cold snap and the Met Office has issued several yellow weather warnings for snow and ice across large swathes of the UK until Wednesday.
Cornwall Insight had earlier predicted a fall to £1,697 but it said this was no longer the case because “forecasts show that prices will be staying relatively high for the remainder of winter”.
Energy markets remain “very sensitive” to global events, the consultancy said, which had kept prices hundreds of pounds above historical norms.
It added that prices were expected to fall slightly in the second and fourth quarters of next year.
Craig Lowrey, principal consultant at Cornwall Insight, said: “Supply concerns have kept the market as volatile as earlier in the year and additional charges have remained relatively stable, so prices have stayed flat.
“While we may have seen this coming, the news that prices will not drop from the rises in the autumn will still be disappointing to many as we move into the colder months.”
Cornwall said that options such as social tariffs, adjustments to price caps, benefit restructuring or other targeted support for vulnerable households “should be seriously considered”.
More than four million pensioners are at significant risk of fuel poverty after winter fuel payments were scrapped for about ten million people. The payments, worth up to £300, will only go to those on pension credit or other means-tested benefits this winter. Unions have called for the government to reverse the cuts.
The energy regulator has put forward changes to the way the price cap is calculated, including shifting some charges levied on the standing charge to the unit rate, although the proposals did not extend to businesses.
Britain has become more reliant on imports of American liquefied gas after the Russian invasion of Ukraine, which has contributed towards wholesale gas prices becoming more volatile.
Higher demand for liquefied natural gas from Asia after summer heatwaves has tightened global gas supplies, pushing European gas prices higher as competition for cargoes intensifies.