Energy bills for households across England, Wales and Scotland have increased from today following a 0.2 per cent rise to Ofgem’s price cap. The adjustment means typical customers on standard variable tariffs will pay approximately 28p more each month, bringing average annual bills to £1,758 compared with the previous £1,755.
This modest increase arrives as cold weather warnings blanket much of the country. Amber cold health alerts are in force for the North East and North West of England until January 5, with temperatures forecast to drop to between three degrees and five degrees.
Yellow alerts have been issued by the UK Health Security Agency covering London, the East, South East, South West, both Midlands regions and Yorkshire and the Humber. Scotland faces a separate yellow warning for snow and ice.
Relief is on the horizon for struggling households, however, with analysts at Cornwall Insight predicting bills will drop by £138 when the price cap is revised in April. This eight per cent reduction would bring average annual costs down to £1,620.
Energy bills are rising from today, January 1
|
GETTY / PA
Chancellor Rachel Reeves announced in the recent budget that scrapping the Energy Company Obligation (ECO) scheme, a policy introduced under the previous Conservative government, would deliver £150 in savings for typical households from April onwards.
Falling wholesale energy prices in recent weeks are also expected to help contain future increases, according to Cornwall Insight. Despite today’s rise, Ofgem noted the current cap sits £37 below last year’s level when adjusted for inflation.
The regulator attributed today’s price cap adjustment to several factors, including contributions towards the £38billion Sizewell C nuclear power station in Suffolk. This adds roughly £1 per month to household bills throughout the construction period.
Higher standing charges, the daily fee for maintaining an energy supply connection, stem largely from funding the Government’s Warm Home Discount scheme.
Rachel Reeves has unveiled plans to reduce energy bills
|
PAThis programme has expanded significantly, with around 2.7 million additional low-income households now qualifying for the £150 winter payment, including 900,000 families with children.
The price cap establishes maximum unit rates and standing charges for customers not on fixed tariffs but does not restrict total bills, as households continue paying for their actual consumption.
Industry representatives warn that even this small increase places additional strain on households already struggling with energy costs.
Ned Hammond, the deputy director of Energy UK, said: “While the new price cap coming into force only includes a small rise, it still means energy bills are too high for too many households.”
The scale of the crisis remains stark, with more than six million households currently experiencing fuel poverty. Domestic energy debt has reached record levels of approximately £5.5 billion.
Mr Hammond called for comprehensive action, noting that bills are expected to stay well above pre-crisis levels even after April’s reduction.
Simon Francis, the coordinator of the End Fuel Poverty Coalition, described the situation as families “choosing between heating and eating” during their fifth consecutive winter in crisis.
Mr Francis highlighted that people continue living in cold, damp properties where risks extend beyond discomfort to genuine danger, including carbon monoxide exposure.
Ofgem regularly changes the energy price cap every quarter
|
GETTYHe urged ministers to move beyond short-term adjustments and invest in energy efficiency, reform pricing structures and fully fund the Warm Homes Plan.
For consumers seeking immediate savings, Which? energy editor Emily Seymour advised shopping around for fixed deals currently available below the price cap.
She recommended contracts shorter than 12 months without significant exit fees, and suggested those on variable tariffs submit meter readings to ensure they pay lower rates for energy used before today’s increase.
Dr Craig Lowrey, a principal consultant at Cornwall Insight cautioned that costs are being shifted rather than eliminated. “Moving the Renewables Obligation from bills to taxation may feel like a win, but ultimately, it’s still going to be paid by the public,” he said.