Uk News What Ofgem's switch to quarterly energy price cap adjustments means for your bills United Kingdom news

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Uk News What Ofgem's switch to quarterly energy price cap adjustments means for your bills United Kingdom news

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Uk News  What Ofgem's switch to quarterly energy price cap adjustments means for your bills United Kingdom news
04 August 2022 - 16:16

PremierLeague-News.Com - Breaking Sport Transfer News ! The energy price cap will be adjusted every three months instead of every six from October, the energy regulator confirmed, as it warned customers face “a very challenging winter”.Ofgem said adjusting the cap more frequently would provide “stability”, reducing the risk of further large-scale supplier failures, which cause disruption and push up costs for consumers. But critics have branded the decision “inhumane”.Here we look at what the price cap announcement will mean for consumers and how it will affect their bills.What is the energy price cap?The price cap is set by government regulator Ofgem (The Office of Gas and Electricity Markets) which limits the rates suppliers can charge households on standard variable and default tariffs for each unit of gas and electricity they use, as well as the maximum standing charge for access to the grids.It was introduced in January 2019 with the intention of protecting consumers from unreasonable rates while accounting for fluctuating wholesale prices, ensuring suppliers do not have to pay more for energy than they sell it for.The price cap is calculated by looking at the costs energy suppliers face – the largest of which is the wholesale price of gas and electricity.This calculation is based on a “typical” household’s energy usage, so households with above average consumption will pay more than the capped amount.Until now, Ofgem has adjusted the cap twice a year, in April and October, with the changes announced two months in advance. The new cap, which will apply from the start of October to the end of December, will be announced on 26 August.What is the cap set at now?The cap has already rocketed once this year – in April it leapt £693, or 54 per cent, from £1,277 to £1,971 per year for customers on default tariffs paying by direct debit. For around 4.5 million customers who prepay for their energy, mostly with prepayment meters, the cap rose £708 from £1,309 to £2,017.How much will it rise this winter?The price cap is forecast to rise to well over £3,000 per year for typical usage when the next adjustment is announced later this month.Last week, utilities consultancy BFY predicted that the price cap would jump to about £3,420 in October before rising again to £3,850 in January.Forecasters at another firm, Cornwall Insight, which has predicted previous price cap increases to a high degree of accuracy, expects the figure to reach £3,600 in January.Why are energy bills climbing so high?Ofgem said the volatility in the global energy market witnessed last winter has lasted much longer than initially expected due to Russia’s invasion of Ukraine, causing gas and electricity prices to rocket as many European countries started to reject Russian imports and Russia cut off supply.

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.The soaring wholesale prices are now being reflected in the prices suppliers are charging their customers.How will having quarterly adjustments affect consumers?Suppliers will be able to raise prices with greater frequency as long as wholesale prices continue to hurtle up, hitting consumers even harder than before.Simon Francis, a spokesman for the End Fuel Poverty Coalition, hit out at Ofgem’s decision to adjust the cap twice as often, noting bill payers will be stung twice this winter as a result.“Households will face a two-stage cost of living crisis this winter thanks to Ofgem’s confirmation that energy bills will go up in October and again in January,” Mr Francis said.“Ultimately, this decision will force more people into fuel poverty in the middle of winter, causing additional stress on the NHS, and it may ultimately lead to increased levels of excess winter deaths this year. It is simply inhumane.”Ofgem has admitted that customers “face a very challenging winter ahead” but insisted moving to quarterly changes will bring “wider benefits” to the nation. Six-month intervals are “too long” and customers should not pay a rate that is likely out of date, the regulator said.Adjusting the cap every six months means “either consumers paying more than the current rate for months if wholesale prices fall or suppliers having to sell gas at a loss for months if wholesale prices go up risking collapse of suppliers which costs all consumers more money,” it added.Related StoriesCritics brand Ofgem's decision to adjust energy price cap every three months 'inhumane'04 August, 2022Concern landlords will pocket £400 energy rebate from tenants that have bills included in rent03 August, 2022'I feel sick': Mum with young baby forced to use foodbank fears energy cap rising again04 August, 2022What kind of Government intervention has there been?The Government has announced a series of support measures intended to help struggling Britons manage spiralling energy bills during the cost of living crisis.These include a £400 grant to help people with energy bills from October and a one-off council tax rebate of £150 for households living in council tax bands A-D.However, these measures are not nearly enough to tackle the problem, Mr Francis said.“It’s clear that the Government and the Conservative Party leadership hopefuls just don’t get the scale of the problem facing the country, nor the public anger at rising bills. They are running out of time to act,” he added.“Only a full programme of emergency financial support, a rapid expansion of energy efficiency programmes and a commitment to bringing more cheap renewable energy on stream will help people stay warm this winter and into the future.”@kt_grant

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