ENERGY bills are to rise to £1,758 a year for millions of households from January.
Households using a typical amount of energy will see their annual bill increase in the new year, regulator Ofgem announced today.
This is compared to the current rate of £1,755 which came in from October.
The new price cap will come into force on January 1, and will affect households on standard variable tariffs.
Major forecasters Cornwall Insight had predicted a 1% drop – but the energy regulator has moved in the opposite direction.
Between January and March, the typical annual dual fuel bill will be £1,758 – up from the current £1,755 cap.
This equates to an average monthly increase of around 28p.
Wholesale energy prices, which make up the largest portion of the cap, have fallen by 4% over the past three months, but remain unpredictable due to events around the world.
Tim Jarvis, Director General, Markets, at Ofgem, 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.
“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.”
Analysts at Cornwall Insight previously said they expected Ofgem’s price cap to dip by £22 – or 1% – in January.
Craig Lowrey, principal consultant at Cornwall Insight, said: “January’s price cap dip might look like good news but it’s only part of the picture.
“Bills are still well above pre-crisis levels and are set to climb again in April, and this time it’s not higher wholesale prices driving the rise.”
Ofgem’s announcement comes less than one week before Chancellor Rachel Reeves’ crucial Budget, as she tries to fill a £30billion hole in the public finances.
She has made clear she wants to help ease the soaring costs hitting Brits, and is said to be planning measures to bring down energy bills.
Energy bills could be slashed by up to £200 a year under the plans being drawn up.
She could scrap the 5% VAT charged on energy bills, which would save the average household around £86 a year.
Ministers are also said to be looking at stripping out green levies that drive up prices.
Energy bills rose by 2% on October 1 to £1,755 – a £35 hike from the previous July price cap.
Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets.
Only those on standard variable tariffs, which is over 35million households, are impacted by the changes.
Those on fixed tariffs don’t see their bills go up or down.
How you can save on your energy bill now
Energy bills are expected to rise again from next year, but there are steps you can take now to bring down your costs.
One way you could make immediate savings is by switching from a standard variable tariff to a fixed tariff.
“There are currently 26 fixed deals that undercut the current October price cap, which offer savings of around £185 for the average household,” Neudegg added.
You can visit price comparison websites like Uswitch and MoneySuperMarket to find and compare the best fixed energy deals.
This will allow you to compare the rates, contract lengths, and any additional features or benefits on offer.
It’s also worth visiting individual energy supplier websites to check if they have any exclusive deals that aren’t listed on price comparison sites.
4 ways to keep your energy bills low
Laura Court-Jones, Small Business Editor at Bionic shared her tips.
1. Turn your heating down by one degree
You probably won’t even notice this tiny temperature difference, but what you will notice is a saving on your energy bills as a result. Just taking your thermostat down a notch is a quick way to start saving fast. This one small action only takes seconds to carry out and could potentially slash your heating bills by £171.70.
2. Switch appliances and lights off
It sounds simple, but fully turning off appliances and lights that are not in use can reduce your energy bills, especially in winter. Turning off lights and appliances when they are not in use, can save you up to £20 a year on your energy bills
3. Install a smart meter
Smart meters are a great way to keep control over your energy use, largely because they allow you to see where and when your gas and electricity is being used.
4. Consider switching energy supplier
No matter how happy you are with your current energy supplier, they may not be providing you with the best deals, especially if you’ve let a fixed-rate contract expire without arranging a new one. If you haven’t browsed any alternative tariffs lately, then you may not be aware that there are better options out there.
