Ofgem chief warns over 'reality' of high energy bills this winter

Ofgem chief warns Brits face ‘reality’ of energy bills being as high or ‘worse’ this winter than last year

• International energy costs have fallen but government support is being pulled 

Brits were warned today that they face the ‘reality’ of energy bills being as high or ‘worse’ this winter than last year.

Ofgem chief executive Jonathan Brearley delivered the stark message as he insisted the industry is ‘fully focused’ on protecting households.

Appearing before MPs, he said that international markets were more stable than in 2022, when households struggled to cope with massive cost increases amid the Ukraine war.

But Mr Brearley cautioned that the absence of a huge government support package this winter meant that there was unlikely to be any relief. 

‘When I look across the market this winter and I think about how does that play out for us this winter, I should start by saying we have a full focus on making sure customers are protected this winter,’ he told the Energy Security and Net Zero Committee.

Ofgem chief executive Jonathan Brearley delivered the stark message as he insisted the industry is ‘fully focused’ on protecting households

A graph shows the costs included in the Ofgem price cap and how it has changed since 2019

‘There is some positive news. The market is more stable, it is less volatile and prices are lower than this time last year.

‘This time last year, we were anticipating and seeing prices at around £4,200 a year without Government support. And last year, Government did step in to give tens of billions of pounds of support to customers.

‘But there is a reality for customers this year: That support is not available. So, for many people, their bills will be very similar this year, and possibly worse for some, than they were last year.’

Ofgem announced last month that the energy price cap will drop from £2,074 per year for the average household to £1,923 in October.

It will cut the maximum price a supplier can charge for gas from 6.9p per kilowatt hour (kWh) now to 6.89p from October 1. Electricity will fall from 30.1p per kWh to 27.35p.

But millions of UK households are still expected to pay more for their energy this winter than they did a year earlier – and Ofgem’s chief executive Jonathan Brearley said that while prices are ‘much more stable this year’, the market is still ‘very tight’.

The average household bill will now end up at around £1,923 per year, according to Ofgem’s calculations. Customers on prepayment meters will pay £1,949 on average.

The cap is the per unit charge, so people using more will pay more. It is based on an estimated 2,900 units of electricity and 12,000 units of gas for the average home.

Mr Brearley was giving evidence to the Energy Security and Net Zero Committee this morning

The drop in the cap for England, Wales and Scotland appears at first glance to be good news for households. Last winter the cap was de facto superseded by the Government’s Energy Price Guarantee which kept the average bill at £2,500.

But on top of that the Government was also paying about £66 per month towards each household’s energy bill. This support is not there this winter, meaning many households will be paying more every month this winter than they were last winter.

And the Resolution Foundation think tank warned that over a third of households across England, 7.2 million in total, would still face higher bills this winter than last.

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