A £94 increase to the average annual household energy bill has come into effect after the regulator upped its price cap in response to a rise in global gas market prices.
The change, taking effect from 1 January, means average households are beginning 2024 with a 5% increase in energy bills – at the start of what could be the coldest three months of the year.
Every three months the energy regulator for Great Britain, Ofgem, sets a maximum price that suppliers can charge customers on standard variable tariffs for each unit of energy. wallet with money Glimmers of hope: your personal finance diary January-April 2024 Read more
The increase means that for the period 1 January to 31 March, the price cap is £1,928 a year for a typical household that uses gas and electricity and pays their bill by direct debit. That is up from £1,834 a year during the final three months of 2023.
There are two components to the rise - the consumer’s gas price (which is linked to the wholesale gas price for obvious reasons) and the electricity price, which as a substantial linkage to gas because a big chunk of generating capacity is based on gas for most consumers.
The government wants to avoid more energy suppliers going out of business, so it is raising the cap in recognition of the increased gas prices.