There have been many energy industry experts analysing the current price of wholesale gas to forecast how much the Ofgem price cap will rise from October 1, and worryingly, each new prediction is higher than the last. Millions of households across the country are facing a bleak winter as the final forecast from Auxilione, pitches the price cap at nearly £3,600.
It is a forecast that will pile pressure on the UK Government to take faster action, but unless Parliament is recalled early from summer recess, nothing will be put in place until September 5 when the country will have a new prime minister. The observation window - when regulator Ofgem tracks the market to decide what the cap will be - closed on Thursday, so the prediction is more certain than ever.
The energy regulator is set to announce the new price cap, which will come into effect from October 1, on Friday, August 26.
Auxilione said its final prediction is that officials will set the cap at £3,576 per year for the average household - the cap is currently £1,971.
However, as grim as the £3,576 price cap is, it’s actually a drop of £62 from Auxilione's previous forecast and the first significant fall in the consultancy's expectations for weeks. The experts say a recent change from Ofgem is to thank for the lower forecast.
The energy experts said: “Ofgem pointed out a potential change they are considering internally to remove around £100 from the cap (in an allowance).
"We've included it here, hence the reduction to the previous forecast. But despite this ray of light, most of the rest of the forecast contains pain for households."
Based on Thursday's gas prices, they think the price cap will hit £4,704 next January and £5,856 in April.
It will then fall but remain at stomach-churning levels, hitting £5,235 in July and £5,235 next October.
The cap impacts how much a household pays per unit of gas or electricity they consume. It is not an overall cap, so families that use a lot of energy will have higher bills, and by cutting energy use people can save on their bills.
The pound figure, which Ofgem supplies, is based on what an average household uses in a year.
The forecast will provide ammunition to those demanding action from ministers to protect families from the pain of a cold winter.
Labour and the Liberal Democrats have suggested plans to freeze bills at the same level as now, while many of the biggest energy suppliers have backed a similar idea.
On Thursday, the trade body for energy companies called for more support on top of the £400 promised to households in May.
Dhara Vyas, Energy UK's director of advocacy. Said: “Time is running very short ahead of October and we know many customers are already struggling after the last price rise - so the predicted increases will simply be unaffordable for millions of households.
"Given the urgency, our industry believes the most practical way to help customers ahead of Christmas will be to increase the amount of support made through the existing bills support scheme.
"However, energy bills are set to remain high for the foreseeable future so it will be crucial to put something in place that will shield customers from these.
"A [UK] Government-backed loan scheme could help do just that by spreading the costs from an exceptionally volatile few months over a much longer period."
Who is eligible for the £400 Energy Bills Support Scheme?
All households with a domestic electricity connection in Great Britain are eligible for the £400 discount. There is no need to contact energy suppliers as it will be paid automatically - nobody needs to apply for this UK-wide support.
How will I receive the discount?
The £400 discount will be administered by suppliers and paid to customers over six months with payments starting from October 2022.
This discount will be applied as follows:
- October - £66
- November - £66
- December - £67
- January - £67
- February - £67
- March - £67
The BEIS said that the discount will be provided on a monthly basis regardless of whether consumers pay monthly, quarterly or have an associated payment card.
If you do not receive the first instalment by the end of October, you should contact your energy supplier.
How each monthly payment will be made
Breakdown of the delivery process for each payment method:
- Direct debit customers - will receive the discount automatically as a reduction to the monthly direct debit amount collected, or as a refund to their bank account following direct debit collection during each month of delivery
- Standard credit customers and payment card customers - will see the discount automatically applied as a credit to standard credit customers’ accounts in the first week of each month of delivery, with the credit appearing as it would if the customer had made a payment
- Smart prepayment meter customers - will see the discount credited directly to their smart prepayment meters in the first week of each month of delivery
- Traditional prepayment meter customers - will be provided with redeemable vouchers or Special Action Messages (SAMs) in the first week of each month, issued via SMS text, email or post. Customers will need to take action to redeem these at their usual top-up point
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