Are energy bills set to rise again?

Energy regulator Ofgem will set the energy price cap for the new year next week. This will determine how much households will pay for energy during the first three months of 2025.

In September, energy researcher Cornwall Insights predicted a small fall in the energy price cap from 1 January, bringing average annual energy bills down to £1,697 for a typical dual-fuel household.

However, in recent days, EDF has suggested that the price cap is likely to rise from the New Year, adding an extra £22 to bills from the previous October price cap.

The energy price cap changes every three months. Its changes are based on several factors, including wholesale energy costs, network costs and policy costs.

EDF said it believes the price cap will now rise next year because of the volatility created by the American election and the continued conflicts in the Middle East, Russia and Ukraine.

The price cap is likely to remain high until spring 2025, with some industry experts suggesting that prices could gradually fall in the second and third quarters of 2025.

Increasing energy bills will be a blow to the thousands of households struggling with the high cost of living.

The latest figures from Ofgem show energy debt is at a record high of £3.3bn, up 57% from the previous year.

The average debt for those with a repayment plan was £851. However, arrears for households without a repayment plan are £1,761 on average.

What is the energy price cap?

Ofgem’s energy price cap is the maximum price that energy suppliers can charge households for each unit of energy and standing charges.

Importantly it’s not the maximum amount you pay. That is determined by how much energy you use.

Ofgem sets the price cap every three months. It's based on the typical energy usage of a household, consuming both gas and electricity.

What’s the current price cap?

The price cap increased on 1 October to £1,717 per year, adding 10% or around £12 a month to the average household bill.

The cap is 6% (£117) cheaper though than during the same period last year, when the average bill stood at £1,834.