Four major changes coming this year that could hit your energy bills as prices soar

HOUSEHOLDS need to know about four major changes coming in this year that could hit your energy bills as prices soar.

Families are battling against eye-watering price hikes to their bills as a cost of living crisis hits finances hard.

Wholesale energy prices are soaring for a number of reasons including a spike in demand, and a worldwide squeeze on supplies.

Because prices are on the up, energy companies have had to pass costs down onto the consumer – which means bills are rising.

Households will have to find an extra £693 to pay their energy bills after the new price cap was confirmed last week.

The cap, which sets the maximum amount providers can charge customers, will come into force from April, rising from £1,277 to £1,971.

With soaring costs, people are having to choose between heating and eating, with not enough money to afford both.

Here’s four changes happening this year that could hit your bills even further.

October price cap hike…

Ofgem reviews the energy bill price cap twice a year.

The first price cap review has already happened this year, and the changes will come into effect in April.

But there’s still another one to go – the second price cap review will happen later this year with any changes rolling out in October.

Experts predict that it is likely that the average household bill will hit more than £2,000 a year at this point.

This is because it is reviewed to reflect the wholesale cost of energy – and as these prices are soaring, it is more than likely that the cap will rise because of this.

… and more could come

A new Ofgem rule which could roll out could see more than two price cap reviews happen per year.

It was revealed last week that the industry regulator is planning on giving itself powers to update the price cap more frequently than once every six months.

It wants to be allowed to do this in “exceptional circumstances” to ensure the price cap still reflects the “true cost of supplying energy”.

But experts have raised concerns over how this could hit millions of families finances.

Laura Suter, head of personal finance at AJ Bell, said: “This is particularly worrying as it means households will have even less certainty about what price they will be paying for energy.”

Energy bill discount

Chancellor Rishi Sunak unveiled a raft of emergency measures to help hard-up Brits following the price cap increase.

One of the measures includes a £200 discount on energy bills, which will be dished out to every single households in the UK in October this year.

You’ll either see your energy bill decrease, or you’ll be given a bill credit.

It won’t be optional, and you will get it – but the catch is that you’ll have to repay it back from April 2023.

At this point, and for the following five years after that, you will see your bill automatically increased by £40 a year.

The so-called “discount” aims to help families manage their energy bills while prices are high.

It is expected it will be more manageable for families to pay the loan the following years when prices aren’t expected to be as high.

Russia and Ukraine crisis

One big issue families should be aware of is the Russia and Ukraine crisis – because it could affect how much you pay for your bills.

Families could be facing a hike in prices for gas and petrol should Russia invade Ukraine.

More than 100 troops from Britain’s elite armed forces have been deployed to the region, as Russian forces build near Ukraine’s borders.

But should tensions escalate, Russia could decide to restrict the flow of natural gas to Europe as key pipelines pass through Ukraine from the country.

Although the government has said the UK is in “in no way dependent” on Russian gas supply. concerns have been raised that shortages could happen – which could drive up prices.