Energy bills to rise from January

Energy regulator Ofgem confirmed today (22 November) that the energy price cap will rise by 1.2% from 1 January 2025.

The rise will add an extra £21 – around £1.75 a month - to an average household’s annual bill.

The energy price cap applies to around 27 million households who are on a variable energy tariff.

It sets the maximum rate your energy supplier can charge you for every unit you use and standing charges.

It is not the maximum amount households are charged for their energy. This depends on how much energy you use.

Despite the rise, January’s bills will be 10% (£190) cheaper than this year's January-March period.

And they will be £2,321 (57.2%) less than during the same period in 2023 during the energy crisis.

Energy consultancy Cornwall Insights believes the energy price cap will drop slightly in April 2025 and again next October. But EDF says it expects a further rise in April (with the price cap reaching £1,777) before it begins to fall in July.

What is the energy price cap?

The energy price cap limits how much companies can charge per unit of energy. Every three months Ofgem revises the cap based on wholesale energy costs.  

Why does the price cap change so much?

The wholesale energy market is affected by several volatile factors, including the war in Ukraine, escalating trouble in the Middle East, bad weather, and maintenance of Norwegian gas infrastructure.

Cornwall Insights says energy prices will remain high but relatively flat over the next three years before beginning to drop from 2028 thanks to improvements in renewable energy.

However, it believes wholesale prices are likely to remain well above those seen during the last decade until 2031 at least.

Is it worth shopping around for cheaper tariffs?

In 2021, energy suppliers withdrew cheaper fixed-price tariffs because of rapid price increases in wholesale markets.

But over the past year, competitive tariffs have started to return.

According to Ofgem, in the past three months around 1.5 million households have made savings by changing energy tariffs.

The regulator is urging more households to take advantage of the increasing choice in the market by moving to cheaper tariffs.

Switching can save up to £140 a year with current deals. More than 8 deals are available that are at least 10% lower than the current price cap of £1,717 per year.

But be careful; many of these deals have lower standing charges alongside a higher unit rate.

This means they’re best suited for households with low energy usage and aren’t suitable for everyone.

What should you do if you’re struggling to pay energy bills?

Contact your supplier immediately when you realise you’re struggling to pay your energy bills.

They will work with you to find a solution that could include:

• Temporary credit, which you’ll need to pay back
• Fuel vouchers to add credit to your gas or electricity key
• An affordable repayment plan
• Signing up to the Priority Services Register to get extra help

You might also be able to get help with your energy bills from the Household Support Fund. Speak to your local council to find out how they allocate their share of the fund and what help you’re entitled to.

Seek free debt help

If you’re struggling with living costs, speak to us. We’ll work with you to review your household budget and find the right solution for you. We’ll also check to make sure you’re claiming all the financial support you’re entitled to.