The UK Energy Research Centre (UKERC) has said that no repeat of last winter's universal £400 energy payment has been promised for this winter, in an article published on 2 November 20231. The centre attributes this to the cost of the previous support package, which it says came to £78 billion across 2022-23 and 2023-241.
The current price cap, set by Great Britain's energy regulator Ofgem, is £1,834 per year until 31 December for a typical household paying by direct debit1. UKERC notes this is well below the peak of £4,279 in January to April last year, but still nearly £800 more than three years ago1. The cap sets the amount paid for each unit of gas and electricity consumed, so a household's bill also depends on how much energy it uses and on the wholesale price of natural gas, which also sets the electricity price1.
Last winter, the government helped all households with a universal £400 payment under the Energy Support Bill1. UKERC writes:
"That support package, along with other measures, launched in response to the rise in energy prices, cost the government £78 billion in 2022-23 and 2023-24. So, it's unsurprising that another payment hasn't been promised this year."
The centre says this winter's typical energy bill will be driven by three factors: the unit price for gas and electricity, the standing charge, and the lower level of government support1. It states that the first two are known, leaving the unit charge as the only unknown, and that this will depend on where Ofgem sets the cap from 1 January next year1.
On supply, UKERC says the UK produces about half the gas it consumes, with another third coming by pipeline from Norway and the balance arriving as LNG or via two interconnector pipelines from Europe1. It reports that Europe has record levels of gas in storage this year, but that global LNG supply remains relatively tight, leaving the market easily spooked by any interruption1. Natural gas generated nearly 40% of UK electricity in 2022, which the centre gives as the reason many households are so exposed to changes in global gas prices1.
Why it matters for households
The end of the universal £400 payment means the support that reduced every household's bill last winter is not in place this winter, so the same unit prices now translate into a larger bill than a year ago1. The cap limits the rate paid per unit rather than the total bill, so a colder winter or higher usage still raises what a household pays1. Because gas sets the electricity price and generated nearly 40% of UK electricity in 2022, a household's exposure to global gas prices runs through both its heating and its power1. The UK's reliance on imported gas, with about half produced domestically and the rest piped or shipped in, ties household costs to supply conditions and price spikes in other markets1. Energy debt carried over from previous winters is also noted as a reason some households will struggle to pay1.
What happens next
Ofgem sets the cap from 1 January next year, and UKERC identifies that decision as the point at which this winter's unit charge becomes known1. The centre also points to the weather in Northeast Asia and Europe, French nuclear availability, and competition for LNG shipments as factors that could move prices before then1.