Energy bills to rise by £21 from January after second winter price cap increase

The average household energy bill is set to rise again from January, as Ofgem announced a 1.2% increase to the energy price cap.

This is the regulator’s second consecutive rise this winter, after the price cap increased by 10% in October.

Ofgem said average household bills will rise by £21 a year or around £1.75 per month.

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.

“Our reliance on volatile international markets – which are affected by factors such as events in Russia and the Middle East – means the cost of energy will continue to fluctuate.

“So it’s more important than ever to stay focused on building a renewable, home-grown energy system to bring costs down and give households stability.”

It comes as millions of pensioners are also facing a winter with less support, after the new government scrapped winter fuel payments for those who do not receive pension credit or other benefits.

About 10 million pensioners will miss out on the payments of up to £300 this year.

Despite the increases, prices are expected to fall slightly in both the second and fourth quarters of next year, according to energy consultancy Cornwall Insight.

Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets.

A Labour Party spokesperson, commenting on the energy price cap announcement, said: “The Conservatives trashed Britain’s energy security by leaving us exposed to global shocks and working people are still paying the price. From banning onshore wind to failing to deliver new nuclear, their reckless decisions sent bills soaring.

“Labour is fixing the mess the Conservatives created, with our clean energy mission that will protect consumers and boost our energy security.”

The energy price cap was introduced by the government in January 2019 and sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales for each kilowatt hour (kWh) of energy they use.

It does not limit total bills, because householders still pay for the amount of energy they consume.

While the cap is significantly lower than at the peak of the energy crisis, which was fuelled by Russia’s invasion of Ukraine in February 2022, prices are still “very sensitive to global events” and supply concerns tied to geopolitical tensions, Cornwall Insight said.

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 also 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 the current cold spell was already having a devastating impact on the most vulnerable people.

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.

“The Government urgently needs to step in and bring in discounted energy bills for disabled people.”