Blow for Caithness households as Ofgem energy price cap predicted to increase significantly
The cost of energy is set to rise again, according to the latest prediction from energy consultancy Cornwall Insight.
It is forecasting a significant rise in the Ofgem price cap from October 1, with a further increase likely to follow in January.
Coming on the back of the news that pensioners are set to be means-tested for the winter fuel payment, it means households could be left struggling again this winter.
Scotland’s national advice service says it will come as a shock on to households still struggling with debts built up last winter.
The analysis from Cornwall Insight found that the typical household faces paying an extra £146 per year, with average bills rising from £1568 per year at present to £1714. Ofgem is due to announce the exact level of the price cap on Friday.
Conor Forbes, policy director at Advice Direct Scotland, 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.
“Customers who are worried about the coming price rises should contact their supplier in case support is available. Now is also a good time to start comparing energy deals.
“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.”
Advice Direct Scotland runs the energyadvice.scot service, which provides free, impartial, and practical advice on energy bills for anyone in Scotland and can be contacted on 0808 196 8660.
Cornwall Insight said that, over the past few months, gas and electricity wholesale prices have rebounded from their 30-month lows in February. The rise in wholesale market prices, particularly since the start of August, has been the key driver behind the forecast uptick in bills.
While prices have stabilised somewhat compared to the previous two years, the market has not fully recovered from the energy crisis and the impact of Russia’s invasion of Ukraine, it added. As a result, the market remains highly sensitive to any global events that could disrupt supply.
The UK’s reliance on imported energy leaves the country very vulnerable to this global volatility. This is seeing both household and business energy bills forecast to stay far above pre-crisis levels.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “This is not the news households want to hear when moving into the colder months. However, the lingering impact of the energy crisis has left us with a market that’s still highly volatile and quick to react to any bad news on the supply front.
“The government will need to adopt a two-pronged approach to tackle rising energy bills. Immediate action is needed to ease the financial burden on households - such as the introduction of social tariffs, or reform of the price cap - but that’s only part of the solution.
“We must also develop a long-term strategy to secure our energy future. This means a fundamental overhaul of our energy system, with a strong emphasis on increasing domestic energy production.”