MILLIONS of people facing a spike in energy costs will find out shortly how much more they will have to pay reports the BBC.

The energy regulator’s new price cap – the maximum amount suppliers can charge customers for each unit of energy – is likely to add hundreds of pounds onto the annual bill for 22 million homes.

Ofgem’s new cap for England, Wales and Scotland will take effect in April.
Ministers are reported to have plans to provide loans for energy firms to help them cut money from customers’ bills.

Details of the new cap are due to be announced at 11:00 GMT.

A typical household will face an annual increase of more than £600 on their energy bill, with a further increase of as much as £400 to come in the winter after the next cap is set in six months’ time, analysts at Cornwall Insight have said.

The cost of living in general is forecast to rise further this year, and the Bank of England will also announce on Thursday whether it will increase interest rates to combat rising prices.

There are also planned tax rises in April, with Prime Minister Boris Johnson under intense pressure to scrap an increase in National Insurance. But he, and Chancellor Rishi Sunak, said at the weekend the tax rise would go ahead.

The cap, which is announced every six months, sets the prices that suppliers can charge for each unit of energy as well as the standing charge.

This is then translated into the expected annual bill for a household that uses the typical amount of gas and electricity.

At present, that is £1,277, but analysts are predicting a 50% rise from April. 

That does not mean there is a limit to how much people can pay. The more gas and electricity that is used, the higher the bill.

Anyone who is on a standard variable tariff, whose fixed deal has come to an end (or is about to), and those moved because their old supplier went bust will be affected by the new higher cap.

There is a separate cap for 4.5 million people on prepayment meters. It means a household using a typical amount of gas and electricity pays £1,309 a year.

Energy firms are struggling under the weight of surging wholesale gas prices. The new cap will allow them to pass some of that cost onto customers.

https://www.bbc.co.uk/news/business-60234732