Get ready for even higher domestic energy bills.
A review of the energy price cap means that millions of households face an extra £693 annual cost from April onwards, up 54%.
The six-monthly review of the energy price cap, carried out by regulator Ofgem, was accompanied by a government pledge to lend £200 per household, repayable over the next five years.
The £9 billion scheme is designed to take the sting out of higher energy bills, but it does not target poorer households.
The energy price cap applies to households in England, Scotland and Wales.
At its new level from April, the cap means a typical household will pay £1,971 for their gas and electricity.
A further rise to the energy price cap is widely expected in October.
Those households using pre-payment meters will face an extra cost of £708 a year.
Alex Hasty, Director at comparethemarket.com, said:
“As the energy crisis continues, millions of households have endured price increases.
“The price cap applies a limit to the cost per unit that energy companies can charge for their default or standard variable tariffs (SVTs), this amount may go up or down based on your usage.
“Given the uncertainty in the market right now, the best option for most households is to move on to an SVT rather than opt for a fixed rate alternative when their current deal comes to an end. We recommend that most stay on, or allow themselves to be moved onto, a default tariff.”
Responding to the rising energy bills, Chancellor Rishi Sunak explained that the majority of families would receive £350 towards the cost. He said:
“I really believe that what we’re doing, £350, it’s a significant amount of money that will make a big difference to the vast majority of households, and I think people, I hope actually, will be reassured by us stepping in.”
Along with a £200 loan paid via energy suppliers in October, the government is paying a council tax rebate of £150 for homes in bands A to D, around 4 in 5 households.
The higher cost for domestic energy bills comes with rising price inflation, higher interest rates and an increase in National Insurance rates in April.
Despite growing calls to scrap or delay the tax hike, the Chancellor confirmed it would happen to raise funds to help the NHS recover from the Covid-19 pandemic.
