As the new year approaches, millions of households across the UK are bracing for another rise in their energy bills, with prices set to remain at a high level well into 2025.
The latest quarterly price cap set by the energy regulator Ofgem will see the average annual energy bill for a typical household rise to £1,738 from January 2025, marking a £21 increase from the current rate.
Although this increase is relatively modest compared to previous surges, the price still remains more than 50% higher than pre-pandemic levels, putting immense pressure on families already grappling with the cost of living crisis.
The Long Shadow of High Energy Prices
The latest rise in energy costs marks three years of soaring bills that have left many people across the UK struggling to make ends meet.
Charities and energy experts warn that the price cap, which limits the cost of each unit of energy, has not eased the burden for millions of households.
With many families having been forced to make difficult choices about whether to heat their homes or buy food, the long-term forecast suggests that high energy prices are likely to persist as “the new normal.”
According to Cornwall Insight, a consultancy, it is expected that energy prices will remain high, with the possibility of further increases in the future.
Despite some relief in the form of lower energy bills during the summer months, the forecast for winter suggests that many people will face an additional financial squeeze as colder weather pushes energy usage up.
Dame Clare Moriarty, chief executive of Citizens Advice, voiced concerns that the latest price rises would force particularly vulnerable groups – such as families with children and people living with disabilities – to make “impossible choices.”
She emphasized that the forecasted costs could result in these groups being “squeezed” financially, leading to further hardship for those already struggling to meet their energy needs.
“With bills remaining at such high levels and no immediate relief in sight, we expect to see people continuing to face extreme financial strain, particularly families with children and those with disabilities,” Dame Clare said.
The Impact of High Energy Costs on Vulnerable Groups
For Angela, a carer from Liverpool, the struggle to pay her energy bills has become a daily reality.
Despite the difficult choices she faces, including not turning on the gas or electricity in her home, Angela has fallen behind on her payments, accumulating arrears of over £1,000. “We just sit there with our onesies on at night. I think it’s terrible, it’s a disgrace,” she told the BBC.
Angela’s story is one of many. Across the country, families like hers are facing a growing crisis as they try to keep warm during the cold winter months while dealing with increasing debt.
For many, energy companies have offered limited relief in the form of emergency credit or hardship funds, but the fact remains that debt continues to accumulate.
According to the charity National Energy Action, households have collectively built up a staggering £3.7 billion in energy-related debt, with the average household in arrears owing more than £1,500 for electricity and £1,300 for gas.
Anthony Scott, a community worker at Kitty’s Laundrette in Liverpool, sees the anger and frustration firsthand. The laundrette provides cheap washing and drying services for people struggling financially, with a free service available for those in dire need.
“I come across a lot of anger, I feel a lot of anger. People are being priced out of using energy in their own home,” Scott said.
The Role of the Price Cap and Government Support
The energy price cap, which affects 26 million households in England, Wales, and Scotland, is intended to protect consumers from extreme fluctuations in energy costs.
However, the cap is not a perfect solution, and while it helps by limiting the cost per unit of gas and electricity, the total bill is still subject to the amount of energy consumed. A long, cold winter could push energy use up, resulting in higher bills for many households.
In the face of this ongoing financial strain, Ofgem has urged billpayers to shop around for better tariffs, noting that a variety of options are available to potentially bring down costs.
“We understand that the cost of energy remains a challenge for too many households,” said Tim Jarvis from Ofgem. “However, with more tariffs coming into the market, there are ways for customers to bring their bill down.”
Despite these efforts to provide alternative solutions, the reality remains that many households are struggling to meet their energy costs.
In addition, the final cost-of-living payments, which were issued to eight million people on means-tested benefits earlier this year, are no longer available, leaving some families without the support they received last winter.
Winter Fuel Payment Cuts and Additional Pressure on Pensioners
One of the key areas of concern for pensioners is the reduction in winter fuel payments. Previously, all pensioners were eligible for a winter fuel payment worth up to £300, but now, only those on low incomes who receive certain benefits will qualify.
Government estimates suggest that an additional 50,000 pensioners will be living in relative poverty next year as a result of these cuts.
However, this estimate does not take into account any potential increase in pension credit uptake, which can qualify individuals for the winter fuel payment.
With many pensioners unaware that they are eligible for pension credit, charities and government bodies have been urging people to check their eligibility and claim the support.
Regional Differences and Support for Northern Ireland
While the energy price cap applies to most parts of the UK, it is not uniform across the country. In Northern Ireland, for example, the energy market is regulated differently, and the price cap does not apply.
However, pensioners in Northern Ireland will receive a one-off £100 payment to help offset rising energy costs. This is part of a series of measures to assist vulnerable groups, though it does not address the broader issue of high energy prices for all households.
The Future Outlook: A “New Normal” for Energy Prices
As the UK continues to grapple with high energy costs, many analysts predict that the era of cheap energy is over. According to Cornwall Insight, energy prices for households are likely to remain elevated for the foreseeable future.
With global fossil fuel prices remaining volatile, energy Secretary Ed Miliband acknowledged that the UK remains “exposed to the rollercoaster of global fossil fuel markets.”
The government has focused on efforts to generate more power domestically, which could provide some relief in the long term.
However, with the immediate impact of rising prices still being felt, particularly among low-income and vulnerable groups, the road ahead looks challenging for millions of households.
For now, as winter sets in and energy bills continue to rise, many families will be forced to make difficult choices about how to stay warm and manage their finances.
While there is some support available, it is clear that without significant changes to the structure of the energy market, high bills and financial hardship will remain a reality for many in the years to come.
Looking Ahead: How Can Households Cope?
While the immediate outlook for energy prices is grim, there are still steps that billpayers can take to reduce their costs.
In addition to switching to cheaper tariffs, households can look for ways to reduce energy usage, such as investing in energy-efficient appliances or making small changes like turning down the thermostat and using blankets to stay warm.
As charities and experts continue to call for stronger government intervention and support for vulnerable groups, it is clear that the struggle to cope with high energy bills is far from over.
As the winter months approach, many will be hoping for relief – but with prices expected to remain high, it’s uncertain how long that relief will last.
