Britons are bracing for the super energy hike ahead of winter this year. Any extra cash may just as well go toward energy. Blame the Ofgem.
Increase Before Winter
Treasury said the taxes would increase, and the rise in goods and services would follow. Reports say a price hike in energy bills is due just as winter kicks in at the end of the year by almost £150.
More Expenses Added to UK Homes
Britain is undoubtedly in a dire financial crisis and economic turmoil. Still, the Office of Gas and Electricity Markets (Ofgem) has recently announced it’s increasing the cap on gas by the end of this year.
Such Bad Timing
The news about the increase couldn’t have come at a more inconvenient time. In the midst of a “£22 billion black hole,” job losses, union strikes, and other costs, the additional expense is bound to affect many.
In the Heart of Winter
As if the state of the public finances wasn’t enough to make Brits shudder. Now, topping everything else is having to endure this cap increase during the coldest time of the year.
More Electricity Consumption in Winter
It’s logical that more electricity is used during winter for heating and the increase will cost Brits a possible fortune.
“No Cap on Bills”
The cap is a good thing since it protects consumers by limiting providers from overcharging. However, FifeToday says the cap won’t limit the cost of bills as more households are bound to use more electricity.
December Increases
According to the Ofgem, the change to the cap will kick off on the 1st of December this year. The Office of Gas says that there will be a 10% increase, roughly £149 increase per year.
Increase Less Than Before
Ofgem says the increase is nothing compared to the previous one for the same period. They said it was, in fact, 6% less than the previous year, roughly £117.
Britons Will Feel the Increase
The initial cap was introduced by the government in 2019, which protects users from paying over the amount due. With the cap, the gas suppliers cannot overcharge consumers either. Many British households are said to feel the crunch this winter with that increase.
Various Factors Are Influencing the Gas Prices
It’s not only in the UK, but the entire world is now affected by certain factors that are taking place as we know it. These significant changes are causing a rise in the cost of transportation, energy, gas, and lots more.
Climate Change
The changes in the environment and extremely hot weather are more factors said to weigh in on the increase in gas prices at the end of the year.
War Exacerbating Gas Prices
According to FifeToday, Ofgem said that the increase was necessary as a direct result of the Russia/Ukraine. During the pandemic, gas prices also rose and remained high even after. Now, these inflated rates are exacerbated by the ongoing war of Russia/Ukraine.
Pensioners Will Struggle This Winter
UK pensioners won’t be benefiting from the now much-needed winter fuel allowance as per the Chancellors’ financial speech addressing the £22 billion black hole in public finance. Pensioners’ fuel allowance was one of the first things taxed this year.
Only a Few May Qualify
However, it’s said that some pensioners will continue benefiting from the winter fuel allowance, but not everyone will qualify.
What’s the Difference?
The difference now is that a series of checks are being done to ensure whether or not the pensioner qualifies for that £200 to £300 allowance. Their date of birth and other income sources are all considered.
Making Sure the Poorest Pensioners Receive
The Chancellor noted in an interview that the cut in pension fuel allowance and the eligibility check was to “ensure the poorest pensioners” are getting an allowance.
Less Fortunate Often Hit the Worst
Low-income families could also feel the chill of winter as the price can significantly affect these homes’ ability to afford the allotted gas for sustaining a comfortable winter.
On the Grid Electricity
The average cost per kilowatt is 25 pence, according to Ofgem. The website states the cost of electricity for households using a Direct Debit form of payment will be about 61 pence per day.
Gas Rate
For households using gas, the average is 7 pence per kilowatt with a daily rate average of 32 pence. These rates are with reference to “default tariffs.”
More Increases to Come?
Analysts predict more energy cost increases as of January 2025 if conflicts between Ukraine and Russia continue. Brits should thus brace for even further increases in the new year.
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Featured Image Credit: Shutterstock / Alex Yeung.