The majority of households are now on Standard Variable Tariffs (SVTs) which are controlled by the price cap. The rapid increase in prices have led suppliers to withdraw cheaper fixed price tariffs. The October cap is an increase of almost £1,600. The April increase was equivalent to £700 more across a year for ‘typical’ levels of dual fuel consumption paid by direct debit. The energy price cap increased by 12% in October 2021, 54% in April 2022 and is due to increase by 80% in October 2022 (gas by 91%, electricity by 70%). Average bills were £760 in 2021 compared to £450 in 2020, a 36% real increase.Īverage heating oil prices increased from just over 20 pence a litre at the start of the first lockdown to almost 60 pence a litre in mid-October 2021. The average bill for the year was £575 compared with almost £700 in 2014.Įlectricity prices increased for much of the last decade. Gas prices were stable or falling for much of the period from 2013 to 2020. This paper looks at data on trends and variations in domestic energy prices and the prospects for prices in the near future. This is likely to have wider negative impacts on the economy, particularly if prices continue to increase.
There is no price cap on non-domestic energy so increases in business energy bills could be larger still and will feed through to higher consumer prices in general. Vulnerable households are not likely to be able to heat their homes properly without additional support. The price increases that consumers have already faced have led to concerns that fuel poverty will increase dramatically this coming autumn and winter. Without real change to the energy system in this country it is consumers, suppliers and the economy that will all continue to suffer the consequences. Today should be seen as a wake-up call to policy makers that short-term thinking and triage of the energy system is not enough. We urge, as we have done previously, for the cap to be reviewed and mechanisms for protecting the most vulnerable, such as social tariffs, to be considered as viable alternatives. However, the cap was never meant to be a permanent solution, it was created for a different energy market than the one we face today and has not protected consumers from what will be incredible hardship this winter. Throughout the energy crisis, the government and Ofgem have remained committed to the cap, and in its ability to shield consumers from a volatile energy market. With every unprecedent rise in bills comes the need for greater reflection on the cap’s purpose and continued place in the energy market. They made the following comments about the cap in response to Ofgem’s announcement of the October price cap level: They also forecast further increases to £6,616 in the second quarter of 2023 and levels of around £5,900 in the third and fourth quarters of 2023. This increase is all down to higher wholesale prices, particularly for gas. The latest from Cornwall Insight, who accurately forecast the scale of the last two cap increases, is £5,387 or 52% above the October to December 2022 cap. Many observers predict that the price cap will increase substantially in January 2023. Prices of heating oil have more than doubled in recent weeks. Households in Northern Ireland and those who do not use gas or electricity to heat their homes are not protected by the price cap.
The annual increases to April 2022 were also the largest ever recorded on a series going back to 1970.
The monthly increases in both gas and electricity prices in April 2022 alone were by far the largest ever on a series going back to 1988. However, the price cap increased by 54% in April 2022 and Ofgem has announced that it will increase by a further 80% on 1 October 2022.
Many consumers were protected, at least initially, by the energy price cap. Wholesale energy prices increased rapidly from the second half of 2021 onwards.
Getting help if you can’t afford your energy bills (Ofgem).The following links give details of the support available from government and other organisations for customers who are struggling to pay their bills: