How much are UK Energy Bills rising?
The Energy Price Cap
When speaking about Energy Bills in the UK, it’s necessary to understand exactly what the Energy Price Cap is.
The Energy Price Cap was introduced in January 2019, with the aim of stopping private Energy Suppliers from making excessive profits by charging customers – mainly those on default tariffs extortionate prices for their energy.
The Cap is set by the Energy Regulator, Ofgem, and it’s updated twice a year – at the start of April and the beginning of October.
Ofgem calculates the Cap based on a range of costs incurred by Energy Suppliers – such as the global wholesale cost of energy, network maintenance costs, and the costs of government energy policies such as green levies and the Warm Home Discount – and the Cap can both increase or decrease depending on the estimated total of these costs.
In addition, Ofgem’s Energy Price Cap also allows private Energy Suppliers to mark up their prices by a certain percentage so that they can turn a profit – a figure which is currently set at 1.9%.
The overall Energy Price Cap figure represents how much an average household, with a typical energy usage, can expect to pay in total for their gas and electricity over the course of a year.
Ofgem also sets three separate Energy Price Caps, which vary slightly based on how much it costs Energy Suppliers to process different forms of payment method.
But, for the sake of convenience, as the Monthly Direct Debit Energy Price Cap is by far the most commonly used, we will focus on that one for this video.
As of April 2021, the Energy Price Cap was £1,138 – meaning that a typical UK household could expect to pay this amount for an annual dual fuel bill.
However, six months later, in response to rising global wholesale gas prices, Ofgem announced that they would be raising the Energy Price Cap by another £139, a 9% increase to £1,277.
And in April this year, they raised it again! But this time, by much more – almost £700, a 54% increase on October 2021, from £1,277 to a whopping £1,971.
This represents a total annual rise of £833 for a typical household – an increase of 73% compared to just a year ago.
Given the fact that these price rises have only just come in, it’s currently impossible to calculate just how badly they’re going to affect ordinary people in practice.
However, in making this video, we asked our followers for examples of how much their own energy bills are about to increase, based on the official estimates provided to them by their Energy Suppliers.
We received a big response, and the general consensus was a near 100% rise on bills compared to 2021 – with price increases appearing to vary very little across different suppliers.
One E.ON customer, Steven, reported that his bill was going to virtually triple – going from £136 a month to £362 after April.
Whilst Maggie, a Utility Warehouse customer, reported a rise in her electricity bill of 99% – from £51 a month to £101.41.
And one Octopus Energy Customer, Laura – who lives in a 3-bed ground floor flat – has just received an estimate essentially doubling her total annual energy bill to around £5,800.
And these responses were typical amongst the numerous replies that we received – meaning that, in the coming months, the vast majority of Brits are almost certainly going to be receiving some truly eye-watering energy bills.
But it’s not just domestic households being affected either.
We received another response, from Ben, who helps run a village pub, reporting that their business Energy Supplier had quoted them a staggering 750% increase for their annual electricity bill – from £4,700 to nearly £34,000.
After shopping around, Ben told us that the best deal they could possibly find was a fixed tariff deal with Scottish Power, for £13,500 a year – a figure which still represents a rise of 175% from last year.
And, if you thought things were bad enough already, these rises could just be the tip of the iceberg – with experts predicting that things could get even worse, and that the Energy Price Cap could even top a staggering £3,200 next October.