Energy bills are predicted to rise again for millions of homes from January, according to industry analysts.
Cornwall Insight has released its final forecast for the Ofgem energy price cap ahead of a key announcement next week. The price cap is currently set at £1,834 a year for the typical household paying by direct debit, but Cornwall Insight expects this to rise to £1,931 from January.
Ofgem will announce its next price cap, which will cover from January 1 until March 31, next Thursday. Looking further ahead, Cornwall Insight currently predicts the price cap will fall to £1,853 in April next year, then to £1,825 in July.
However, these are less certain predictions as there is still some time to go until these future price caps come in. Around 29 million people are on the price cap. The price cap applies if you’re on your energy supplier’s standard variable rate (SVR) tariff - so if you’re not locked into a fixed deal.
But it is important to remember there isn’t actually a total cap on what you can pay for energy. The Ofgem price cap sets a limit on what suppliers can charge for each unit of gas and electricity you use, as well as the standing charges. This means your total annual bill could be more or less than the price cap figure, depending on how much energy you use.
The unit rate for electricity for direct debit customers is currently 27.35p per kilowatt hour (kWh) and the standing charge is 53.37p. The unit rate for gas for direct debit customers is 6.89p per kWh and the standing charge is 29.62p. Standing charges are a fixed daily amount you have to pay for energy, no matter how much you use.
There are slight regional variations in terms of the rates you're charged under the price cap, with headline numbers used to give an average across England, Scotland and Wales. How you pay for your energy will also affect your overall bill.
For those who pay on receipt of their bill, the price cap is £1,959 a year. The Government is adding a small subsidy to the prepayment price cap, after promising these households won't pay more than those on direct debit. If you prepay for your energy, the price cap is £1,861 a year but this has been discounted to £1,821 a year.