AJ Bell press comment – 26 August 2022
The latest energy price cap announced by Ofgem points to a bleak winter ahead, says AJ Bell head of personal finance Laura Suter:
“After all the estimations, predictions and finger-in-the-air sums we finally know the extent of the energy price hike everyone is going to endure in October. The price cap has risen to £3,549 for everyone paying by direct debit, a whopping 178% increase on last October’s average annual bill of £1,277. Last October we saw an increase of £139 in the average annual bill as a result of the price cap, but this year’s jump is more than 11 times higher at £1,578.
“There’s no doubt that for many households a bleak winter is ahead – particularly with another price hike on the horizon in January after the regulator pushed ahead with its controversial reformed price cap. Many households can’t afford energy bills at their current level, let alone bills that are thousands of pounds a year more.
“With average annual energy bills at £3,549 that means energy costs are well over a third of the annual state pension of £9,628. Even pensioners getting the full government support available to them of £1,500*, are still facing paying more than £2,000 for their energy bills, which many simply won’t be able to afford.
“It’s the same story for disabled households, who will be entitled to maximum support of £1,350**, but will typically have far higher than average energy bills due to energy-intensive specialist equipment and being at home more.
“Frustratingly for those struggling with energy costs there are no easy hacks or tricks to significantly cut their bills – advice to turn off chargers, or devices not in use, will save pennies and is insulting to families facing such staggering price increases. What’s more, with standing charges having risen slightly, it now costs £5.18 per week before you’ve even used a unit of energy. The only option is to cut energy usage as much as possible and hope for further Government support for those struggling the most.”
*£150 council tax rebate, £400 energy bill rebate, £300 winter fuel allowance, £650 pension credit support = £1,500
**£150 council tax rebate, £400 energy bill rebate, £150 disability support, £650 low income support = £1,350
