UK households could face higher energy bills this year as the energy price cap is predicted to increase amid ongoing global tensions.
Ofgem, the government regulator for the electricity and downstream natural gas markets in the UK, will announce the price cap for October to December on Friday as experts predict a rise of around 9%.
Currently, the price cap, which sets a limit that suppliers can charge per kilowatt hour (kWh), is set at £1568 per year.
However, Cornwall Insight, which provides energy market analysis, said the price cap could rise to £1714, meaning the typical household faces paying an extra £146 per year from October 1.
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The price cap does not limit a household’s total bills because people still pay for each unit of gas and electricity they use. The figures provided are calculated for an average-use household, and if more energy than average is used, a household will pay above the cap.
Cornwall Insight said one of the main reasons for the potential increase in the energy cap is recent tensions in the Russia-Ukraine war.
The group added that the lingering impact of the energy crisis has left the market highly volatile and that any bad news on the supply front has a knock-on effect on the price.
Russia-Ukraine war effect on UK energy prices
Ukrainian forces have pushed further into Russia in the last week as the war reaches more than 900 days of fighting.
The news of Volodymyr Zelensky’s men making further headway into Russia, as they target key infrastructures, is predicted to influence the energy market as there could be foreseeable supply issues.
Although the UK Government officially banned the import of Russian oil products, including crude oil and refined products, in December 2022, it is widely reported that it still imports fossil fuel molecules from the country indirectly as sanctions imposed by western nations do not cover oil products refined elsewhere.
Indian refineries are now importing a record amount of oil from Russia, and the UK is importing a record amount of oil from Indian refineries, reportedly up by 176% since the invasion of Ukraine.
Advice for those struggling with energy bills
With two consecutive falls in the energy cap, many were hoping energy prices were on their way down to pre-crisis prices.
Conor Forbes, policy director at Advice Direct Scotland, has urged people in Scotland not to struggle alone with energy bills this winter following the news of the predicted cap increase.
He said: “This predicted rise in Ofgem’s energy price cap will come as an unwelcome shock to households preparing for what looks set to be another long and difficult winter.
“The impact of the cost-of-living crisis is still being felt across the country and many people are struggling under the burden of energy debts they built up last winter.
“We urge people across Scotland not to struggle alone – our expert advisers can provide free advice on the support available and ensure that households are claiming all the benefits they are entitled to.”
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