Ofgem caps energy bill increases at 13% by limiting winter price rises

• Ofgem has set a cap on energy price rises of 13% from 1 April, through which it has limited bills for households
• It has also ordered that suppliers must not charge customers more than the regulated price cap: what they pay depends on the tariff they have
• Analysts predict that bills for the average household could rise by 0.5% over the next six months

In England, Scotland and Wales, the regulator Ofgem has set a limit on energy price rises at 13%. Households will see their bills rise, but not above that level, as the regulator says it will protect people from new tariff increases.

The regulator says the cap applies to standard tariffs, which means there is no reason for energy bills to rise further. For example, the cap means that the average annual bill for a typical household will increase by 5.3 million; why the regulator chooses the maximum price for a single unit of gas and electricity is to prevent the maximum price from rising for standard tariffs.

For those who pay by direct debit, electricity costs 24.67 pence per kWh up to 26.11 pence, while gas — from 5.74 pence per kWh up to 7.33 pence. Based on the new tariff rates, the average annual bill for gas and electricity combined will increase by £321 to £1,862 a year.

Prognosis from Cornwall Insight suggests that, over the next six months, the average bill will not rise significantly due to the cap set by Ofgem. It says that the rate of wholesale gas prices will be the main factor affecting the final bill.

Rising energy prices will continue to pose challenges for businesses and households in the UK. The regulator says that the cap is designed to protect consumers from sharp increases in energy bills. It also notes that the Warm Home Discount may help some people with lower incomes.

Ofgem said it would keep the price cap for the next period at no more than 26 times the current level.

Tags: Economy/Energy/Europe