The energy price cap will increase in January for a second consective time, raising bills by 1.2 per cent. The new figure will bring the average household energy bill to £1,738.
This is £21 more than the October to December cap of £1,717. The new cap, lasting from January to March 2025, will be £190 cheaper than the cap during those months in 2024.
The energy price cap is the maximum amount energy suppliers can charge for each unit of energy for those on a standard variable tariff, which includes most households. It is expressed as an annual bill for an average home.
Tim Jarvis, director general of markets at Ofgem, said: “While today’s change means the cap has remained relatively stable, we understand that the cost of energy remains a challenge for too many households.
“However, with more tariffs coming into the market, there are ways for customers to bring their bill down so please shop around and look at all the options.”
The regulator sets the price limit for each unit of energy used based on several factors including wholesale energy prices – the amount energy providers pay for gas and electricity before supplying it to households.
Mr Jarvis adds that the UK’s reliance on “volative international markets” is the leading reason for fluctuations in the price of energy, citing ongoing events in Russia and the Middle East.
Rising energy bills were recently cited as a major factor in inflation creeping back up above the Bank’s 2 per cent target in October, reaching an unexpected 2.3 per cent.
Craig Lowrey, principal consultant at Cornwall Insight, said: “Supply concerns have kept the market as volatile as earlier in the year and additional charges have remained relatively stable, so prices have stayed flat.
“While we may have seen this coming, the news that prices will not drop from the rises in the autumn will still be disappointing to many as we move into the colder months.”
Ofgem is currently considering the future of price protection, including the suitability of the price cap and a potential permanent ban on so-called acquisition tariffs – cheaper prices for new customers to lure them away from their existing supplier.
Charities have voiced their concerns over another price rise, with National Energy Action saying that “targeted government support” has now become essential.
David Southgate, policy manager at disability equality charity Scope, said: “This is a bitter pill to swallow for the many disabled people who face sky-high bills because they have no choice but to use more energy.
“Life costs a lot more when you’re disabled, because of needing to use more heating to stay warm and healthy, or charging vital equipment like wheelchairs and breathing machines.
“Our disability energy support services are hearing from disabled people who have cut back everything they can and racked up huge amounts of debt.
“The Government urgently needs to step in and bring in discounted energy bills for disabled people.”
