Energy price cap rises again – with cost of bills expected to stay high for months | Money News
Gas and electricity bills will become even more expensive in January, as the energy regulator Ofgem ups the price cap.
A typical yearly bill will be £1,738 from January, an increase of 1.2%.
For bill payers, it means an extra £21 a year or around £1.75 a month.
It’s another blow as falls in prices had originally been forecast for the new year and the cap was lifted 10% from last month.
After the latest hike, there were hopes of a fall in the new year, but wholesale gas and electricity costs are still above historic averages.
It’s also bad news for the prospect of inflation falling again. Costlier energy bills were a key reason inflation rose sharply to 2.3% last month.
Instead of falling steeply, annual bills are expected only to ease by £5 from April, according to analysis from respected forecasters Cornwall Insight.
Since Russia’s invasion of Ukraine early in 2022, energy bills have spiked and remained high. The regulator again warned that relying on volatile international energy markets, susceptible to tensions around the world, directly impacts household bills.
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Focus on producing renewable energy is “more important than ever” to bring costs down and give households stability, Ofgem’s director general of markets Tim Jarvis said.
But even after the rise from next year, energy will still be 10% cheaper than the same time in 2024 – and 57.2% less than 2023.
Advice to consumers
Ofgem has urged consumers to switch tariffs, saying savings of up to £140 are currently available.
The energy price cap sets a limit on how much companies can charge per unit of electricity. Every three months, Ofgem revises the cap based on wholesale costs.
As many as 1.5 million households switched tariffs over the past three months, it said.
The five million customers who pay for their energy after it has been used – via standard credit payments – have been advised by Ofgem to switch to direct debit paying.
This could save £100, it said.