A charity warned that millions more households may be in fuel poverty by the end of this year.
According to National Energy Action, 4 million households in Britain are currently in fuel poverty. Another 500,000 homes reached that state in October.
The expected price increase in April will lead to 1.5 million additional households being in poverty. That’s 6 million households.
The announcement comes at an opportune time for many who are worried about their rising energy bills, with new costs likely to more than double by the New Year.
Increasing energy prices could lead to fuel poverty in millions more homes
Prices for fixed tariffs are likely to reach over £2,000 this year – more than double what some were paying at the beginning of last year.
Energy analysts, Cornwall Insight, have said prices will get even higher at the end of this year with its current forecast for the winter 2022 to 2023 price cap standing at approximately £2,240 per annum.
Meanwhile, although Ofgem’s current price cap prevents suppliers from charging more than £1,277 a year to a typical default tariff customer, the level is expected to increase by hundreds of pounds in April when reviewed.
After the collapse of 25 energy suppliers, there are fewer options for switching. Half the industry was gone in a matter of months.
Many homes are now worried about the cost of paying for these inflated bills in 2022.
Adam Scorer (chief executive at National Energy Action) stated: “Every home should have a safe environment, but millions of homes are living in cold realities.
The cost of living is the highest in 10 years in the UK, with the largest driver being household energy bills. Those with the lowest incomes suffer most when essential services costs rise.
‘Bills have increased by well over £230 since last winter and millions now face a daily heat or eat dilemma. In April we expect energy bills to double, with average householders paying twice as much for heating than last year.
‘Over the same period, those on the lowest incomes have seen their income plummet by over £1,000 per year. People already living on tight budgets are finding it difficult to keep their family warm.
“No amount of helpful tips and savvy shopping will be able to deal with this.”
Many homes will worry about the high-priced bills 2022, and will have to make financial plans.
Ofgem will be consulting over the long-term to help solve the problems within the industry.
The regulator said this could help to reduce the bills and perhaps spare customers a levy of up to £100.
Talks are continuing, but nothing has been reached.
Experts have criticized Ofgem’s inaction so far. Many are urging more action to prevent bills from spiraling out of control.
Joe Malinowski is the founder of Energy Shop. He said, “The Government and Ofgem watched the destruction in the energy markets from a distance.”
“They have relied upon the energy price cap protecting consumers, while also keeping their fingers crossed, desperately hoping that it would solve its problems.”
“They kicked it down the road, while allowing half all active energy providers to crash and burn,”
Even though there are fewer options available, customers should still make use of comparison sites in order to save money and switch providers.
While fixed tariffs had been the best choice, standard default offers are more likely to be less expensive as they are already capped.
Find out more information about the future of energy in 2022 and what consumer support options are available.