ENERGY bills are set to rise by £94 for millions of households in the new year.
The energy regulator Ofgem has confirmed the new price cap, which comes into effect on January 1.
The cap will rise from £1,834, the lowest figure since March 2022, to £1,928 a year.
It means the average household will see their annual bill increase by £94.
Around 4.3million households on prepayment meters will continue to receive a government-backed discount to ensure that they aren't charged more than those who pay by direct debit.
It's important to note though that this is not a cap on the overall amount people will pay for their energy.
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Instead, it caps the amount that they pay per kilowatt hour, or unit, of gas and electricity.
The £1,928 figure is calculated based on what Ofgem thinks an average household will use.
This is calculated assuming that a typical household uses 2,700 kWh of electricity and 11,500 kWh of gas across a 12-month period.
Those who use less will pay less, and those who use more will pay more.
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Be aware that the exact unit rates and standing charges that you pay will vary slightly based on your supplier, where you live and how you pay for your gas and electricity costs.
Jonathan Brearley, chief executive of Ofgem, said: "This is a difficult time for many people, and any increase in bills will be worrying.
"But this rise – around the levels we saw in August – is a result of the wholesale cost of gas and electricity rising, which needs to be reflected in the price that we all pay.
"It is important that customers are supported and we have made clear to suppliers that we expect them to identify and offer help to those who are struggling with bills."
And energy bills are likely to be the highest they’ve ever been for most homes this winter, according to Uswitch.
Richard Neudegg, director of regulation at Uswitch.com, said: "This rate increase will bite during the coldest period of the year when households need to use the most energy.
"The price cap will go up by 5% from January due to the increases in the wholesale energy market.
"This means energy bills are likely to be the highest they’ve ever been for most homes this winter.
"Between January and March, average bills will be £46 more expensive than the same period last year when the government’s Energy Bill Support Scheme was in place."
The news comes just a day after Chancellor Jeremy Hunt delivered his Autumn Statement and set out his plans for taxes and spending.
Unfortunately, there was no mention of energy support for the 29million homes paying Ofgem's price cap rates.
In his Autumn Statement Jeremy Hunt announced:
- The biggest ever price hike for tobacco products
- A major win for The Sun's Save Our Sups campaign with alcohol duty frozen
- A major benefit change for renters on Universal Credit
- A £10,000 energy bill discount for Brits living near pylons
- A £192 income boost for self-employed workers
- A £470 payment boost for millions on Universal Credit
- Millions will be stripped of benefits under harsh new rules
- Nurses will save £500 in a personal income tax cut
- No fuel duty hike in huge relief for drivers
How do I calculate my bill?
To calculate how much you pay on your current fix, you will need to find out both your unit rate for gas and electricity and the standing charge for each fuel type.
The unit rate will usually be shown on your bill in p/kWh.
The standing charge is a daily charge that is paid 365 days of the year – irrespective of whether or not you use any gas or electricity.
You will then need to note down your own annual energy usage from a previous bill.
Once you have these details you can work out your gas and electricity costs separately.
Multiply your usage in kWh by the unit rate cost in p/kWh for the corresponding fuel type – this will give you your usage costs.
You'll then need to multiply each standing charge by 365 and add this figure to the totals for your usage – this will then give you your annual costs.
Divide this figure by 12 and you'll be able to work out how much you should expect to pay each month from January 1.
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