Keep knowledgeable with free updates
Merely signal as much as the UK power myFT Digest — delivered on to your inbox.
Family power payments in Britain will rise once more in January after regulator Ofgem stated it might raise the value cap by 1.2 per cent following a rise in wholesale prices.
The regulator on Friday set the energy value cap for the interval between January and March at a degree that may imply a typical family pays £1,738 a yr, in contrast with £1,717 now.
The transfer follows a much bigger 10 per cent increase in the cap that took impact in October. Payments for about 26mn households stay lots of of kilos greater than earlier than the power disaster, which was worsened by Russia’s full-scale invasion of Ukraine in 2022.
The value cap, launched in 2019, units a restrict on how a lot power firms can cost properties on default tariffs per unit of fuel and electrical energy consumed. It’s reset each three months to mirror adjustments in wholesale costs.
The upper cap underlines the difficulties going through the Labour authorities, which attacked the earlier Conservative administration over the price of residing disaster and has pledged to cut back power payments.
Fuel heats the overwhelming majority of Britain’s properties and is used to make greater than one-third of its electrical energy, that means any enhance in wholesale fuel costs has an affect.
Whereas typical payments have fallen from the height of £4,059 hit early final yr, the money owed households owe power firms reached a report £3.7bn on the finish of the second quarter, in keeping with Ofgem.
Tim Jarvis, director-general of markets at Ofgem, stated on Friday that power payments “stay a problem for too many households” and urged clients to buy round for higher offers.
Ofgem stated cheaper offers have been returning to the market, noting that eight in the marketplace have been “at the least 10 per cent” under the value cap degree.
Wholesale fuel costs stay excessive due to a mix of geopolitical tensions and disruption to provides from gasfields.
On Wednesday, UK power suppliers pledged additional help of about £500mn for households battling payments. A number of business executives and campaigners have argued for a so-called social tariff which might see low-income households pay much less for his or her power.
Ed Miliband, power secretary, stated the value cap rise would “trigger concern” for households and the federal government “will do all we are able to to assist individuals”.
He highlighted assist out there for weak properties, such because the Heat Dwelling Low cost, and stated the federal government’s plans to maneuver in direction of extra renewable power was “the one approach to take again management of our power”.
Nonetheless, the federal government has been closely criticised for reducing winter gas funds for pensioners. A Whitehall affect evaluation this week confirmed the transfer will push as much as 100,000 pensioners into poverty per yr.
Ed Davey, chief of the Liberal Democrats, urged the federal government to freeze power payments and reinstate winter gas funds. “Sufficient is sufficient,” he stated.
On a per unit foundation the cap will rise from 24.50 pence per kilowatt hour to 24.86 pence per kWh hour for electrical energy, with a day by day standing cost of 60.97 pence, down from 60.99 pence now.
For fuel, the cap will enhance from 6.24 pence per kWh to six.34 pence per kWh, with a day by day standing cost of 31.65 pence, down from 31.66 pence.