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UK Chancellor offers £350 govt help as Ofgem hikes energy price cap

UK Chancellor offers £350 govt help as Ofgem hikes energy price cap

British energy regulator, Office of Gas and Electricity Markets (Ofgem), has reportedly announced a record-breaking 54% hike in energy price cap for the UK. The move would raise the default variable tariffs on gas and electricity for millions of households by an average of £693 ($941).

The hike, which comes just a few months after a 12% rise that was announced in October, will come into effect from April. Energy suppliers can now charge households a maximum of £1,971 ($2,605) yearly.

To quell consumer worries, Chancellor Rishi Sunak has supposedly responded with an announcement of a government package worth £350 per household to alleviate the immense pressure people are facing amid the cost of living crisis.

Customers who were using prepayment meters, around 4.5 million households, will see a rise from £708 ($962) to £2,017 ($2,741).

The rise in energy price caps comes as UK households await further cost increases from a rise in council tax and as well as in national insurance payments.

The relief package also includes a £200 ($ 271) discount on energy bills from October onwards which will be repaid over the coming five years, starting from 2023, as well as a 150 ($204) discount on council tax for households within bands A, B, C, and D.

In a news conference at Downing Street, Chancellor Sunak stated that the amount of the relief package will bring respite to a majority of households and expressed hope that Britons will be reassured by the government’s aid to adjust to rising prices.

However, Mr. Sunak also warned that households will have to adjust to rising prices in the future.

The central bank of the UK, Bank of England, also announced that it will be raising interest rates, which are expected to rise from 0.25% to 0.5%.

The hike in the energy price cap comes amidst surging prices of wholesale gas and includes a £68 charge after Ofgem had to cover the costs for millions of customers whose energy suppliers went bust in the past few months.

Ofgem also stated that it will be announcing new measures to assist the energy market withstand future volatility, such as adjusting the price cap more frequently, to reflect the true cost of supplying energy.

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Sunil Jha

Sunil Jha has been a part of the content industry for close to two years. Having previously worked as a voice over artist and sportswriter, he now focuses on writing articles for, across a slew of topics, ranging from technology to trade and finance. With a business-oriented educational background, Sunil brings forth the expertise of deep-dive research and a strategic approach in his write ups.