Energy bills to hit £3,000 next year

UK inflation dips as food and energy costs remain high

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The UK is in the midst of an ongoing cost of living crisis which is being exacerbated in part by a sharp rise in energy bills. External pressure on the wholesale energy market, as well as the war in Ukraine, are resulting in gas and electricity prices to skyrocket for average households. While Britons have received some protection thanks to the Government’s energy price guarantee, the majority will still see their bills rise as of next April.

Through the initiative, households with average energy usage do not see their bills go up past £2,500 and was supposed to last for two years from October 1, 2022.

It should be noted that the amount suppliers can charge per unit of gas and electricity is capped for households; bills are not just automatically capped at £2,500.

However now, the energy price guarantee is being raised to £3,000 from next April and will now last only 12 months from that date.

A consequence of this is that households with typical energy usage will see their energy bills go up by around £500 as a result.

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Experts are sounding the alarm that “everyone” will be paying more for gas and electricity in the coming months because of this decision.

Laura Suter, the head of personal finance at AJ Bell, shared her concern for the Government’s decision to change the price guarantee.

She explained: “Everyone faces higher energy bills from April, as the Government cuts the help on offer to households.

“The Energy Price Guarantee currently caps the rate we pay per unit of energy at a level which means the average household’s bill is £2,500.

“From April those rates per unit of energy will rise, taking the average bill to £3,000 – although in reality lots of people will pay far more if their energy use is above average.”

Outside of this policy, the Government also rolled out various other schemes to help people with their soaring energy bills.

Among them was the £400 energy bill discount which is being automatically applied to peoples’ overall bills during the winter months by suppliers.

Similarly, the Government’s council tax rebate assisted those on low incomes in certain property tax brackets.

However, much of this extra support is not continuing next year which means certain households could face an additional £1,050 in costs annually.

This is despite the Government continuing with its cost of living payments for those on means-tested benefits, pensioners and people with disabilities.

According to Ms Suter, households have already “exhausted” their options when it comes to saving money on energy costs and removing further support could be detrimental to many people.

The finance expert added: “On top of this, the Government hasn’t said it will be providing the universal £400 off energy bills that it has handed out to every household this winter.

“It is also not repeating the £150 council tax rebate that was given at the start of 2022 to those in properties Bands A to D.

“It means that the average household will face an extra £1,050 a year in energy costs from April – on top of the existing leap in prices.

“Most households have already exhausted their energy-saving measures, so there’s little ability to reduce the bills further by cutting usage.”

The pending changes to the energy price guarantee will take place in April 2023.

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