ITV says Ofgem expects prices cap to be £2,800 in October, up from £1,971 now - how will we manage

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Just saw ITV talking about the Head of Ofgem writing to Rishi Sunak today to inform him the price cap is expected to be £2,800 in October, up from £1,971. That's 1k increase. It was £1,277 in October 2021. How are we and other people going to manage. Is the UK really going to hit a massive recession now? What is BofE going to do about interest rates - inflation will hit the roof. Feeling very scared about the future now

Yes - ours was £2k and the deal we got had no fees so it did work out but if it's £7k or something you need to work out if the saving is worth it!

I say "just" but it was early April with Nationwide. 40% LTV.

Oh I'm ever so worried about this. Currently on a fixed rate until December when I expect we'll be in for a nasty shock. We're barely scraping by as it is.

If you think your situation is bad - think about pensioners. We can't increase our income and we NEED to stay warm.

@onthefencesitter but past moments of high inflation were associated with rise in salaries. High inflation plus high interest rates and stagnant wages just means a bigger squeeze. I would love to overpay but we just cant not with the kids and everything else

Jaxhog

Equally us Carers with disabled sick spouses
No extra money coming in...but a hell of a lot more going out..

Yes, my gas and electricity is already far, far more than £2800 a year so seeing it written like that is useless to me. I need to know kWh and standing charge increases to calculate the impact.

I did increase my income. Unfortunately increases in nursery fees and petrol to actually get to work obliterated the money.

MoonGoon The French are looking at 4% rise compared to 54% in UK. I think we’ll see riots in UK before Fr. The energy companies are mostly state owned compared to being privatised in UK.

I agree it’s horrible and I dread to think what will happen this winter. I’m in a position where I can help my pensioner parents financially if I need too.

I understand, its a really tough situation for everyone. Sending hugs.

That will be people feeding a habit not feeding kids

Me and my partner are both on decent incomes with no kids, we're very lucky to have a good buffer at the moment but if interest rates go up a lot on the house I know that things could change very quickly and I'm really worried about that (FTBs recently so low LTV). I don't know how people are managing with this and kids, especially people in underpaid roles like carers.

To make things (seem) worse, apparently we have more liquid gas that we know what to do with right now because we have the highest number of ports that can accept it. But we got rid of all our gas storage so cannot hang onto it for next winter to help reduce the price shock. WTF have governments been doing that none of them has taken energy and food security seriously for decades.

www.thisismoney.co.uk/money/bills/article-10830493/Will-UKs-tumbling-gas-price-surplus-lower-energy-bills.html

I'm nearly 40 and have never worried about money in my adult life like this before. I also live alone so feel like it's a double whammy because there's no other income coming in and a lot of the costs are still fixed, like the standing charges and obviously things like keeping the fridge, wireless router, lights etc on.

As a PP said, there's also lots of talk of supporting the poorest but what about everyone else on low and moderate incomes? The price cap is more than a month's take home pay for many workers, and all other bills and prices are going up too.

The headline reason is that the generators and suppliers are different companies

a company generating electricity, or extracting gas, sells it at the market rate and as that’s fine up, they’re making more.

a supplier buys at that market rate and sells to you and I, and to businesses, factories etc. the price cap has to be at a level that allows them to survive (remember all those suppliers going bust recently). If the price cap is too low, they all go under.

so it’s not the suppliers making money, it’s generators

The price cap monetary figure is calculated using an average user's gas and electricity yearly consumption.

The average yearly gas use is 12000 kwh.

The average yearly electricity use is 2900 kwh.

Therefore if you consume these amounts of gas and electricity, if on your supplier's variable standard tariff the total price you pay will be no more than the current Offgem capped amount.

If you use a lot less than these figures, you will pay a lot less than the capped amount. If your energy consumption is a lot higher then you will pay more than the headline offgem capped amount.

I hope this makes it clearer for everyone.

add 42.06% to your current bill
So the current average price cap prices are:

Electricity
£0.28 per kWh
Daily standing charge: £0.45

Gas
£0.07 per kWh
Daily standing charge: £0.27

and the new ones would be around:

Electricity
£0.41 per kWh
Daily standing charge: £0.66

Gas
£0.10 per kWh
Daily standing charge: £0.39

Yes I know I’ll pay more as our usage is high, it is just useful to know how much more. I see the another poster has broken it down so that’s fab.

Thank you!

By the way an average user is one having a three bed house with 2 to 3 people in it.

Though someone with a 3 bed house could be very frugal and use a lot less energy whilst someone else, may use enough energy to run a 5 bed detached house.

The standing charges vary slightly dependant on which region of the country you are in.

I’ve increased my payment slightly even though my usage has dropped over the summer, I’m hoping to build a bit of credit and also so the price rise is less of a jump. Other than that I have no idea what I’ll do, as I can’t use less than I am now, I can’t earn more than I do now, I have 2 dc and am a single parent but earn too much for any benefits so no idea.
Also you can’t compare our price increases to France, they have far more nuclear power stations so are insulated from external changes, unfortunately our govt decided to go green by turning coal power stations off without putting anything in to replace them yet.

Of course, sorry. We’ve been on the standard variable for a while so I didn’t have people coming off a fixed tariff in mind. Apologies if I misled anyone. Also had failed to notice a PP had already pointed out it was a 42% increase.

I just think that the media obscures the severity of the increases when they use the average figures. Not only does it fail to inform their audience it colludes to erase the penalty of high use users who for example, have lots of people in one home, need energy heavy medical equipment, need to keep their homes warm to avoid compounding chronic illnesses - things like that.

At the very least they could use the unit prices alongside the headline figures. And it's not as simple as adding 42% of each element of the bill. Gas is likely to go up more proportionally than electricity, like it did last time and I'm not convinced the standard rate will go up much at all, which would make the big losers high gas users, again.

@tribpot In the SW the SVR for energy on dual fuel is:
Gas SC 27.22p KW 7.47p
Elec SC 51.626p KW 28.408p

My tariff finished 31.3 and my new annual bill is £1,605, of this £350 is SC and VAT so it costs me £1 a day before I boil a kettle. The £150 will help this summer but I'm planning on not using my ch in the winter.

If the price cap is based on the total amount paid by an average user, then does that mean that if we all make a big effort to use less in the hope of having lower bills, the capped unit costs could actually rise as a consequence?