The energy price cap will rise by 0.2 per cent from January 1 for a typical household in England, Scotland and Wales, the regulator Ofgem revealed this morning.
The unanticipated increase comes after households had been expected to learn that their energy bills would fall slightly from January in today’s price cap reveal.
Experts at Cornwall Insight had said ahead of the announcement that they expected the price cap to drop by 1 per cent because of lower wholesale energy prices.
But Ofgem said that for an average household paying by direct debit for gas and electricity, the overall bill would now rise to £1,758 per year.
Cornwall Insight had also previously suggested April’s price cap is likely to rise by around £75 a year for an average household, based on its most recent estimates.
The price cap refers to the default tariff applied when a customer is not on a fixed-rate tariff. It sets a maximum rate per unit and standing charge that can be billed.
Ofgem markets director Tim Jarvis said: ‘While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets.
‘The price cap helps protect households from overpaying for energy. But it’s only a safety net and there are practical ways that customers can pay less for their energy.
The energy price cap will rise by 0.2 per cent from January 1, Ofgem has said (stock image)
‘Look at different tariffs and choose what’s right for you or change the way you pay to Direct Debit or smart pay-as-you-go. Prepayment remains the cheapest way to pay, and these customers are already saving around £47 on average.
‘While wholesale energy costs are stabilising, they still make up the largest portion of our bills which leaves us open to volatile prices.
‘That’s why we’re working with government and industry to boost clean energy and reduce our reliance on international sources we can’t control.’
The announcement comes ahead of Chancellor Rachel Reeves’s Budget next Wednesday.
Ofgem said the latest rise amounts to a 28p a month increase for the average dual fuel household.
It added that year on year when adjusted for inflation, the new cap is 2 per cent or £37 lower than the same period in 2025.
The regulator added that changing payment methods from standard credit to direct debit can help reduce costs.
Eight million customer accounts pay by standard credit but could be making savings of about £136 with one switch, Ofgem said.
The announcement comes ahead of Chancellor Rachel Reeves’s Budget next Wednesday
The regulator also said it had brought in rules to ensure anyone struggling with their bills gets help from their supplier and can ask for support if needed.
Options include tailored repayment plans or routes to financial assistance and debt advice.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: ‘Energy bills remain stubbornly high as households face a fifth winter of the energy costs crisis. Today’s announcement sees standing charges rise yet again, highlighting the structural problems in how energy is paid for.
‘The addition of a new levy on bills which pays for nuclear power stations is unwelcome and could have been delayed until closer to when these plants actually start to generate electricity.’
He said today’s announcement keeps the average energy bill at almost £700 above the levels of winter 2020/21 and over £150 more than at last year’s General Election.
Mr Francis continued: ‘Despite many people living in cold damp homes, the energy industry has posted more than £125 billion in profits in the UK alone in recent years.
‘Yet some business lobbyists have called for the Chancellor to end the Windfall Tax. Instead, next week’s Budget is a chance for the Government to finally get serious about ending fuel poverty.
‘We need long-term investment in energy efficiency, not short-term thinking. We need action to bring down electricity prices, not excuses. And we need a fair tax regime that puts people before profiteers.’
