Energy bills will remain dangerously high despite next week’s Ofgem Price Cap announcement
Energy bills will remain dangerously high despite next week’s Ofgem Price Cap announcement
On Friday 25th August at 0700, Ofgem will announce the energy price cap which will apply to household bills from 1 October 2023.
In a major change, the values which the regulator uses to calculate the “average bill” will change and reduce (known as TDCVs, typical domestic consumption values).
But this means that in order to compare this winter to last, households will need to look at unit costs and standing charges.
The End Fuel Poverty Coalition has compiled average unit costs and standing charges for direct debit customers over previous years to enable a true comparison with the data Ofgem will publish.
The figures below are based on price cap prices in effect on 16 August, forecasts are that these will vary very slightly from 1 October and the figures will be updated after the Ofgem announcement.
Looking back to before the energy bills crisis started in winter 2020/21:
- Gas unit costs are up 150% and daily standing charges are up 6% in comparison to winter 2020/21
- Electric unit costs are up 67% and daily standing charges increased 117%
Compared to winter before Russia invaded Ukraine in winter 2021/22:
- Every unit of gas is 85% higher today than in winter 21/22 and the gas standing charge is 11% higher.
- Every unit of electricity is 45% higher today than winter 21/22 and electricity standing charge is 113% higher.
For winter last year, the prices are compared with the Energy Price Guarantee rate which was in effect.
Energy unit costs have come down from last winter (-24% for gas and -7% for electricity).
However, standing charges have increased from last winter (+2% for gas and +14% for electricity).
In addition, the Government’s Energy Bills Support Scheme has ended. This kept the average bill 16% below the Energy Price Guarantee rate. Therefore, in real terms, people will not feel any reduction in unit costs as the EBSS money has been taken away from them this winter.
Households are also battling record prices for all other essentials and facing record household energy debt levels.
A spokesperson for the End Fuel Poverty Coalition commented:
“Even after the next Ofgem announcement, gas unit costs will still have more than doubled since winter 2020/21 with standing charges also rising. For electricity, the situation is even worse thanks to Britain’s broken energy system which fails to pass on the cheaper cost of renewables to the customers.
“Electricity unit costs have shot up by more than 50% since winter 2020/21 with daily standing charges doubling.
“Looking at a year on year comparison, any declines in wholesale costs are almost cancelled out by the end of the Government’s Energy Bills Support Scheme which means bills stay at similar levels to last year while people have less ability to pay these stubbornly high prices.
“This coming winter will not feel any better than last as energy bills remain at dangerously high levels.”
The prepayment meter (PPM) premium which added around 10% to these people’s bills will be eradicated for some customers and PPM users will be paying roughly the same as DD customers. But for those on standard credit, the price premium continues and these customers will pay about 10% more than DD and PPM customers this winter.
