Energy bills: When Ofgem’s price cap will be announced and what it means for you | Personal Finance | Finance

Rising energy bills, on top of the cost of living crisis, are pushing Britons to breaking point – and analysts have warned it will only get worse. NHS bosses have now called for more help from the Government as expert predictions suggest the energy price cap could rise to more than £4,000 a year by 2023. And this week, Ofgem will announce the latest increase, due to come into effect in October.

Energy regulator Ofgem will be announcing its next price cap on August 26 which will come into play by October 1, 2022.

The period for the price cap will be from October 1 to December 31. Basing it on previous announcements, Ofgem will most likely share the news in the morning.

Ofgem previously updated the price cap twice a year, however, the energy regulator announced this year that it would update it four times a year from October. 

According to MoneySavingExpert.com, the energy price cap changes will occur on the first day of January, April, July and October. These prices will be announced on:

• November 24
• February 27
• May 26
• August 25

The most recent estimations from Cornwall Insight predict that the price cap will rise to £3,582 in this week’s announcement, which will come into force on October 1. While energy consultancy Auxilone, has predicted the cap will be set at £3,576 per year.

This is expected to rise further, with analysts warning this could possibly reach more than £4,200 in January next year for typical use. Auxilone suggests it could even reach £4,704 next January, rising to £5,856 in April.

The latest update comes after Ofgem’s price cap was increased in April this year going from £1,200 to £1,971.

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Introduced in January 2019, the aim of the price cap is to protect customers from short-term changes. The price cap sets a limit on the maximum amount suppliers can charge customers in England, Scotland and Wales for each unit of energy and sets a maximum daily standing charge – the amount someone pays for their home to be connected to the grid. 

Ofgem described it as a “backstop protection from the Government, calculated by Ofgem”. However, it is not an overall cap, so households using lots of energy will have higher bills.

Ofgem stated that these changes, which are designed to enable suppliers to recoup costs, were necessary to reduce “the risk of further large-scale supplier failures which cause huge disruption and push up costs for consumers”.

Recent research by the Office for National Statistics (ONS) found that 45 percent of adults who pay energy bills found it very or somewhat difficult to do so in the first half of August.

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Last week a non-executive director at Ofgem quit over the changes to the way the energy price cap is set. Christine Farnish told The Times she disagreed with a decision to change the cap stating that she felt the regulator had not “struck the right balance between the interests of consumers and interests of suppliers”.

Energy prices have risen sharply due to the demand for gas increasing when COVID-19 restrictions eased. 

Russia’s invasion of Ukraine further threatened supplies and has pushed up the price of wholesale gas to levels the world has never seen before. And since August last year, around 30 energy suppliers went bust in the UK. 

To combat the increasing energy bills, the Government has already announced that it will provide £400 for every household in the UK which is to be paid in six instalments from October 2022.

The Government has also promised further support of up to £1,200 for more vulnerable people.