Energy Bills Rise, With Predictions of 3 Percent Increase in April

File photo of an online energy bill from Feb. 3, 2022. Jacob King/PA Wire

Energy bills for homes in England, Wales, and Scotland increased by 1.2 percent on Jan. 1, with analysts predicting a further rise of 3 percent in April.

Ofgem announced in November that it would raise the amount that gas and electricity suppliers could charge customers, increasing by around £1.75 a month, from £1,717 to £1,738 a year.

The energy regulator cited global factors as a reason for the rise, specifically volatility in the Middle East and the Russia–Ukraine war.

In recent days, consumer groups like Money Saving Expert have been urging people to provide an up-to-date meter reading to their energy providers within a few days either side of Jan. 1. This will reduce the risk that suppliers will estimate customers have used more energy at the new higher rate than they actually have.

Which? said on Tuesday that many households will be concerned about price increases, advising them to shop around for deals on tariffs.

Emily Seymour, the Which? energy editor, said: “You should compare what your monthly payments would be on a fixed deal with what you‘d expect them to be if you remain with the price-capped variable tariff to see what the best option is for you. As a rule of thumb, we’d recommend looking for deals cheaper than the price cap, not longer than 12 months and without significant exit fees.”

Seymour added that people concerned with affording bills this winter should contact their energy company as they are obliged to help if customers are struggling to pay their bills.

The price increase comes as temperatures in parts of the UK are set to plunge following flooding.

The new charges also come on top of government changes to Winter Fuel Payments, meaning around 10 million pensioners will lose out on support paying their energy bills, worth up to £300 this year.

Predicted 3 Percent Increase

Analyst Cornwall Insight has predicted that the energy cap could climb by 3 percent from April 1, rising from £1,738 to £1,785 a year for a typical dual fuel consumer.

The analyst said that while early December saw a dip in wholesale energy prices driven by an easing of supply tensions in Europe, geopolitical instability saw prices rebound in the latter half of the month. This was related to uncertainty over the Ukraine transit deal and a higher withdrawal from EU gas storage facilities.

Craig Lowrey, principal consultant at Cornwall Insight, said: “The news of a rise in our forecast will be disappointing to households who will no doubt have been hoping for relief from recent cap rises.

“However, the turbulence in wholesale markets—a level of volatility we haven’t seen for months—reminds us to remain cautious of predictions, which could very well increase or decrease several times before the April cap is set.”

Elise Melville, energy specialist at price comparison service Uswitch.com, said that the sudden change in the April price cap prediction “suggests that energy prices will remain uncertain into next year.”

‘Costly Start to 2025’

The increase in energy bills is not the only pressure that consumers will be facing in 2025.

Ofwat announced last month that water bills are set to increase by an average of £31 a year between 2025 and 2030 to help finance a £104 billion upgrade in the sector.

TV licences will get more expensive from April, going up from £169.50 for a colour set to £174.50, after the government approved a 2.9 percent rise in line with inflation.

April will also see council tax rise by up to 5 percent, which communities minister Matthew Pennycook said in November was the “right threshold,” pointing to the pressures being felt by local authorities.

Buses on London Bridge in London, on Dec. 11, 2019. Ian West/PA Wire

Single bus fares in England will also go up from £2 to £3 from this week and will be in place for the whole of 2025.

Pressure group Campaign for Better Transport has said that this increase “will be a costly start to 2025 for many people.”

Campaign for Better Transport’s Silviya Barrett said: “Buses are our most used form of public transport, so they need to be affordable. The fare cap has proved popular with passengers and helped boost ridership so the Government must now look for a long-term replacement for the scheme from next year to avoid any further rises.”

The Department for Transport said on Wednesday said that the cap increase will continue to ensure millions of people can access affordable bus tickets—with savings being up to 80 percent on some routes—“while offering value for the taxpayer.”

The department added that it was providing more than £150 million to fund the cap this year.