Millions are braced for an announcement today that will likely add hundreds of pounds every year to household gas and electric bills.
UK Government regulator Ofgem will announce a new energy bills price cap for homes in Scotland, England and Wales on Thursday at 11am.
The move will quickly be followed by a statement from Chancellor Rishi Sunak who is expected to announce some support for households already struggling to make ends meet.
How much will my bills go up by?
The current annual price cap for household gas and electric bills is £1,277.
Analysts are expecting today’s announcement could push that price up by as much as 50%.
That could make annual energy bills as high as £1,900 – which could make households pay an extra £630 a year, or £53 a month.
The changes expected to be announced by Ofgem would come into effect in April.
Michael O’Brien, energy policy officer at Citizens Advice Scotland, told BBC Radio Scotland many households would find the increase unaffordable.
He said: “I think people are really worried. 50% is a staggering rise if you use average annual consumption figures.
“Statistics don’t tell the whole story for households affected though – it means more worry and more stress.
“If you pay by bill or direct debit then it means a greater chance of accruing debt on the account.
“For pre-payment customers there’s a chance of cutting back or even self-disconnecting from supplies.
“We are really concerned about this.”
Mr O’Brien encouraged customers concerned about their bills to contact their supplier or Citizens Advice Scotland.
Why are energy bills going up?
The energy price cap is the maximum price suppliers can charge households in Scotland, England and Wales on a standard tariff.
It is reviewed every six months and about 15 million homes had their energy bills increase by 12% when it was last updated by Ofgem in October.
🙋A question we often hear is “what is the price cap?”
While we don't increase or decrease the price of energy, we calculate the level of the government's #EnergyPriceCap that applies to default energy tariffs.
This may affect you. See how it works📺 https://t.co/7SyVaj2ogq pic.twitter.com/4wqpvMDGpl
— Ofgem (@ofgem) January 25, 2022
Prices have been rising worldwide due to an increase in demand on gas and energy, which has pushed prices to unprecedented levels.
The surge is the cause of more than 20 UK energy suppliers going bust in recent months with Bulb Energy, which has 1.7million customers, remaining in special administration being run by Ofgem.
Will any support be announced?
It has been confirmed that Chancellor Rishi Sunak will make an announcement following today’s update from Ofgem.
According to the Times, he is expected to give households in council tax bands A to C rebates funded by government grants to assist poorer households.
State-backed loans to of up to £200 to give all homes a discount on bills have also been suggested as another alternative measure that could be introduced.
Expert analysis suggests Ofgem’s review of the price cap will affect about 22million homes.
“Mog”, a teacher from Orkney, told BBC Radio Scotland her family was already being “frugal” with energy bills.
She said: “It’s almost as much as rent now. We have smart switches that turn things off when we leave rooms, we have storage heaters that are kept at low levels and they go off between Easter and October.
“So we don’t waste electricity. We don’t run a tumble drier and wash things on economy modes to save electricity. I can’t imagine how bad it would be if we weren’t doing these things.
Are you struggling to afford your household energy bills? Get in touch with us at livenews@ajl.co.uk